Optical-fiber maker Corning Inc.
said it would cut its workforce by another 1,000 employees, in “response to the continuing downturn in the telecommunications sector.” Specifically, the company said incoming orders for fiber are suddenly slowing.
The cuts, which will be initiated by the end of this year, will be felt at Corning facilities around the world, company officials said in a statement released just after today’s stock-market close. These reductions will include hourly and salaried employees primarily at manufacturing locations. Corning will begin to notify those employees impacted by today’s announcement over the next few weeks.
Corning had already told workers at its Wilmington and Concord, North Carolina manufacturing facilities that it planned short-term Labor Day holiday shutdowns.
The latest job action is “being taken to match overall operations with the weakening demand for optical fiber and cable, primarily in North America and Europe,” company officials said in the statement.
James B. Flaws, Corning’s chief financial officer, said the company has seen a abrupt slowing in orders across all fiber product lines. He now expects overall market growth for optical fiber in 2001 to be significantly less than the previous 15 percent outlook. Corning also said its unit shipments of optical fiber and cable in the second half of the year will be less than the same period in 2000.
While Corning continues to see a downward trend in demand for its LEAF and MetroCor fiber products, it still expects its premium fiber products, as a percentage of total fiber volume, to be at 20 percent or less for the year.
“We are continuing to deal with the poor short-term visibility across the telecommunications market and we need to react quickly to changing market conditions,” Flaws said. “We remain confident in the robust outlook for bandwidth demand, and continue to believe that this demand will fuel growth in our telecommunications business in the future.”
Today’s job-action announcement brings Corning’s 2001 reductions to approximately 8,000 positions or about 20 percent of its total global workforce of 41,000 at the beginning of the year. Corning anticipates that the costs of these reductions will be included in the previously announced $300 million to $400 million restructuring charge that will be recorded in the second half of this year.
Corning earlier this month cut 900 jobs in its optical-fiber cable division, as it cut positions at its plants in North Carolina, Texas, Missouri, Mexico, Puerto Rico and the Dominican Republic. That’s on top of at least 5,900 jobs eliminated earlier this year, in response to the industry-wide downturn in the telecommunications sector.
Last July, the glassmaker-turned-fiber-optic concern posted a net loss of $4.8 billion for its second quarter, because of merger-related charges and the write down of obsolete inventory. But when those charges are factored out, the company not only made money, it beat Wall Street estimates.
The company’s net loss came in at $5.13 a share, compared with net income of $149 million or $0.17 per share, in the year-ago second quarter. Without the charges, Corning said it earned $0.29 a share in the quarter. The consensus of analysts’ estimates, as tracked by Thomson Financial/First Call, had Corning coming in at $0.18 a share.
Corning’s revenues were up 5 percent to $1.87 billion from $1.78 billion in the year-ago period. Optical-cable and fiber sales were up by 7 percent to $939 million in the quarter from $875 million in this year’s first quarter. Photonic-technologies sales, though, dropped 33 percent to $158 million.
And last June, Corning said it would delay the construction schedule on its Oklahoma City, Okla. optical-fiber plant, and would slow the expansion rate at its Concord, N.C. facility.
Corning Cuts Employees…Again
Optical-fiber maker Corning Inc.