300 Corvis employees are laid off

Columbia telecom confirms it let go 24% of work force

Number in Md. not given

Downsizing follows cut this week of 10% of workers at Ciena

November 15, 2001|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

In the latest indication that the telecommunications sector is struggling, Corvis Corp. of Columbia laid off 300 employees yesterday - nearly a quarter of its work force.

The cuts were not announced, but the company confirmed them when questioned by The Sun.

The telecommunications equipment-maker cut jobs worldwide, but most of the layoffs were in North America, a company spokeswoman said. The number of job cuts in Maryland was not available.

Keira Shein, the Corvis spokeswoman, said the layoffs were in virtually every department. Employees were notified yesterday morning and most left immediately, she said.

The layoffs come at a time when many believe the economy has entered into a recession, and the entire telecommunications sector is strained.

Several telecommunications companies have announced layoffs this year, including Corvis rival Ciena Corp. of Linthicum, which laid off 380 workers, or about 10 percent of its work force, Monday.

"We've seen fairly dramatic declines throughout the industry," said Simon M. Leopold, a telecommunications equipment analyst who follows Corvis for Merrill Lynch Global Securities in New York.

"We're doing this to become a stronger company, to be there to service our customers," Shein said. "These difficult painful actions were necessary to help us operate in this difficult market."

Corvis warned last month that layoffs were expected, but offered few details at the time.

A chunk of the layoffs - about 40 jobs - come from the closing last month of a fiber-optic component manufacturing plant in Canada, Shein said.

Shein said Corvis planned to set up a career transition center at its Columbia headquarters to help laid-off employees. Those who lost their jobs were receiving "appropriate severance packages," she said.

Corvis had 1,270 employees when its third quarter ended Sept. 29, about 5 percent fewer than it had during the previous quarter. The 300 new job cuts will mean a staff reduction of about 24 percent.

"The number does sound a little bit larger than what we were expecting," Leopold said, "but it's not a surprise to see them essentially operate on a lower cost basis."

The move by Corvis falls in line with what has been seen throughout the industry, he said.

Leopold said some of the larger telecommunications companies are experiencing about 33 percent year-over-year staff reductions, according to estimates that the companies have discussed.

The most drastic example, Leopold said, is Nortel, which had 94,500 employees at the end of last year and is expected to have 45,000 at the end of this year.

Younger companies carry an inherent risk, Leopold said.

Corvis was founded in 1997, but Leopold said: "I would not characterize Corvis' risk as any different from any company of their maturity and size. And I think to add to that, Corvis certainly has a very strong balance sheet, and that's worked in their favor. They have a substantial cash position."

Corvis had cash and cash equivalents of about $715 million at the end of the third quarter.

During a company conference call last month announcing the results, David R. Huber, Corvis' president and chief executive officer, said the company expected to end the year with about $640 million in cash.

Corvis stock rose 57 cents, or nearly 21 percent, to close at $3.32 on the Nasdaq stock market.

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