Ciena, Avici make more cuts

The pink slips keep flying. Ciena and Avici Friday announced workforce reductions in an effort to align costs with declining revenue in the face of sharply reduced carrier spending.

Ciena cut approximately 450 employees, or 17% of its workforce. Ciena estimates that the layoffs will generate between $50 million to $55 million in annualized cost savings, including approximately $25 million to $30 million at the operating-expense level, prior to restructuring-related charges.

Ciena expects to realize the majority of the cost savings by the end of its fiscal fourth quarter, 2002. The company expects to record a restructuring charge of between $75 million to $80 million in its fourth fiscal quarter associated with the workforce reduction and other costs.

"The actions taken today are part of Ciena's ongoing efforts to manage our business back to profitability as soon as possible without sacrificing what we believe are future revenue and growth opportunities," said Gary Smith, Ciena's president and CEO, in a statement. "We believe today's actions, along with our ongoing efforts to manage expenses and prioritize resources, will help us reach our goal of lowering our quarterly operating expenses to the mid-$80 million range by our fiscal third quarter, 2003."

Avici, meanwhile, cut 75 employees, or 24% of its workforce. The company said it will also consolidate its two Billerica, Mass., facilities into one, and will further expand its outsourcing of manufacturing activities.

Avici expects to record a restructuring charge of approximately $2.5 million in the September quarter. The company expects cash savings from these actions to exceed $6 million annually.

"Avici has taken these actions in light of the prolonged downturn in the telecommunications equipment market," stated Steve Kaufman, president and CEO, in a statement. "We are confident that our value proposition is sound."

Avici also said it is proposing a reverse stock split in order to keep its stock trading on NASDAQ. Companies with a stock price below $1 - like Avici - risk being de-listed from NASDAQ.

Avici's board is proposing a reverse stock split of up to one-for-five shares of Avici's common stock. The reverse split proposal will be submitted to shareholders at a November meeting.

The final determination on whether to implement the split, as well as the actual exchange ratio, will be determined by the Avici board following stockholder approval.

RELATED LINKS