Corvis eliminates another 180 jobs

Workers in Columbia take brunt of firings

January 30, 2003|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Corvis Corp., the Columbia-based telecommunications equipment company that has seen its work force shrink and stock price pummeled, said yesterday that it cut another 180 jobs - most of them in the company's research and development division.

The layoffs, most of them in Columbia, come at a time when the entire telecommunications industry remains mired in a severe downturn. Carriers have reduced spending and many telecom equipment makers are strapped for cash. Several firms in the industry, large and small, have slashed their work forces over the past year.

"It's a difficult world when you're a startup and you have no ties to the bigger companies that can support you during these tough times, and they just don't have that," Sam Greenholtz, a senior analyst at Communications Industry Researchers Inc., said of Corvis. "And there's no real sign that the market is easing anytime soon, either."

This is the sixth round of layoffs at Corvis. The job cuts, coupled with continuing layoffs in France that Corvis announced late last year, will bring the company's staff to fewer than 500 employees by the end of the first quarter. That's down from 863 workers about a year ago and 1,625 in mid-2001. "Current market dynamics remain difficult for Corvis and every equipment provider in our space," Corvis Chairman and Chief Executive Officer David Huber said in an announcement released after the markets closed.

"Today's actions were driven by the need to ensure a strong financial position to support the sales and world-class service of our industry-leading and commercially proven networking solutions. This initiative is part of our continuing effort to structure the business for the long term," Huber said.

Corvis, which makes equipment for fiber-optic networks, was founded five years ago and wowed investors with a $1.1 billion initial public offering July 28, 2000. In August 2000, its stock rose to a high of $108.06, but the share price has since spiraled downward.

Shares have been trading at less than $1 for months, and the company moved its stock over to the Nasdaq small-cap market in October.

Shares rose 3 cents yesterday to close at 80 cents.

Corvis had $548.7 million in cash and short-term investments at the end of the third quarter. The company said yesterday that it expects to report having about $504 million left at the end of 2002, including the cost of buying back up to $25 million of its stock to help boost cash value per share.

Corvis has no debt and has been trying to reduce the rate at which it uses cash to $25 million or less a quarter. The company reported a net loss of $127.4 million, or 31 cents a share, on revenue of $1.4 million for the third quarter that ended Sept. 28. Financial results for the fourth quarter are to be reported after the market closes Feb. 6.

Andrew Backman, Corvis' vice president of investor relations and public relations, said the company is now able to use its research and development more efficiently because of the development and maturity of its product line.

"We're realigning our research and development organization," he said. "Our continuing R&D will focus on product development, product expansion" and improvement to product features.

Greenholtz, however, said the company's cutbacks re-emphasize the trouble Corvis is having selling its products. Corvis has six customers.

"I can't say I'm surprised," Greenholtz said. "I think it was to be expected, and probably in Corvis' case, this may not be the last one.

"They'll probably need to do further downsizing just because of their position in the business and lack of any substantial customers."

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