Corvis to cut another 150 jobs

Announcement comes as firm narrows 1Q loss

It's to be 7th round of layoffs

Telecom's payroll to fall to 350 from 1,625 in 2001

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

Corvis Corp., the Columbia maker of fiber-optic equipment, said yesterday that it plans to cut about another 150 jobs in the coming months, bringing its staff down to about 20 percent of what it once was.

This is the seventh round of layoffs for the company, which has been hit hard by the telecommunications downturn. Many telecom firms are strapped for cash as their customers reduce spending, and Corvis is no exception.

Corvis has about 500 workers. The latest round of layoffs will bring its staff to about 350 or less, down from 1,625 employees in mid-2001. Corvis is also considering additional job cuts in Europe, the company said.

"As we continue to realign the business because of market realities, we're bringing the cost structure in line with the market realities and bringing the cash burn down," said Andrew Backman, Corvis' vice president of investor relations and public relations. "And, unfortunately, the market realities made these restructuring initiatives unavoidable."

Founded five years ago, Corvis dazzled investors with a $1.1 billion initial public offering on July 28, 2000.

In August 2000, shares of its stock rose to a high of $108.06, but they have suffered in the telecom slowdown.

The shares are now traded on the Nasdaq SmallCap market, where they closed at 74 cents yesterday, down a penny.

Corvis also reported yesterday that its losses narrowed and revenue fell during the first quarter

The company had a net loss of $47 million, or 12 cents per share, on revenue of $1.5 million for the quarter that ended March 29.

The earnings fell below analysts' expectations of a loss of 10 cents per share, according to consensus estimates.

For the corresponding quarter of last year, Corvis had a net loss of $71 million, or 20 cents per share, on revenue of $8.7 million.

Corvis' adjusted net loss for the first quarter - which does not include restructuring and other charges - was $36.1 million, or 9 cents per share, compared with an adjusted net loss of $41.3 million, or 11 cents per share, for the first quarter of 2002.

Rick Schafer, a research analyst for CIBC World Markets in Denver, said one major concern about Corvis is the rate at which it is burning through cash.

"What are they going to do about that. I think that is the issue," Schafer said.

Corvis spent $55.8 million during the first quarter. The company had $448.6 million in cash and cash equivalents at the end of the first quarter.

Other questions that surround the company, Schafer said, are its relationships with potential customers, its planned acquisition of Broadwing Communications Services and its litigation.

The company was found by a federal jury this week to have infringed on a patent of rival Ciena Corp. of Linthicum.

The decision came after a ruling in the same court last month that Corvis infringed on one of Ciena's patents but did not infringe on two others.

Corvis said yesterday that it expects revenue to be lower during the second quarter than it was in the first.

Revenue in the first quarter came mostly from contracts with Telefonica SA, Broadwing Communications and the U.S. government, Corvis said.

"We're pleased that in this quarter we recognized our first revenues from our newest customer, the U.S. government," David R. Huber, chairman and chief executive officer of Corvis, said in a statement.

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