Acterna layoffs to hit 78 in Md.

Total of 400 to be cut around the world

Reductions called `necessary'

Quarterly loss widens on shrinking revenue

May 30, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Acterna Corp., a Germantown-based holding company whose largest subsidiary makes communications testing equipment, said yesterday that it will lay off 400 workers - 78 of them in Maryland - as it struggles with a wider loss and falling revenue.

All of the job cuts will be at the communications testing subsidiary, also called Acterna. It will bring the number of employees at that company down to about 3,200 worldwide, 700 of them in Maryland.

"The reductions may be unfortunate, but I view them as necessary to align the expenses with the revenues," said Timothy Slevin, a senior vice president at Parker/Hunter Inc., an investment banking firm in Pittsburgh.

Acterna Corp. reported yesterday that it had a net loss of $147.2 million, or 77 cents a share, on revenue of $212.5 million in its fiscal fourth quarter. That compares with a net loss of $20.7 million, or 10 cents per share, on revenue of $393.3 million in the quarter ended March 31, 2001.

Shares of Acterna, formerly Dynatech Corp., closed yesterday at $1.44, down 5 cents. The shares are down 88 percent from their 52-week high. In August 2000, shares were trading for $30 to $40.

About 75 percent of the holding company's revenue comes from Acterna, said company spokesman Jim Monroe.

The job cuts come at a time when the telecommunications industry has been stuck in a severe downturn that has left companies reeling from declines in sales and earnings. Tens of thousands of jobs have been lost.

The cuts at Acterna are expected to save the company about $75 million, but the company will take a $17 million restructuring charge over the next two quarters.

Monroe said the roughly 320 jobs cuts outside of Maryland would occur throughout the company's operations around the world.

"We have a major presence in North America, South America, Europe and the Asia-Pacific region, and the impact is spread across those regions," he said.

It is the second round of recent job cuts for the Maryland subsidiary. Acterna also laid off 68 Germantown workers in March, Monroe said.

Monroe said Acterna's goal is to maintain a "very robust" product-development side of the business while consolidating manufacturing. That includes plans to move some European manufacturing to Germantown.

The layoffs are expected to be completed over the next two quarters. When that happens, the parent company will have cut its work force by 36 percent - to 4,100 from 6,400 - since the beginning of fiscal 2002, which began in April last year.

Slevin, the analyst, said Acterna's problems are symptomatic of the struggling telecommunications sector.

"Their performance is, I believe, reflective of the industry," he said.

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