Ciena to shut San Jose engineering facility

425 will lose their jobs

some might relocate here

April 21, 2004|By William Patalon III | William Patalon III,SUN STAFF

Ciena Corp., a locally based maker of telecommunications-networking gear, said yesterday that it will shut down its San Jose, Calif., engineering facility on Sept. 30, a move that will save millions while costing 425 workers their jobs.

The company will shift the product-development work from San Jose to its other facilities. Some employees - fewer than 100 - might relocate to Ciena's facility in Linthicum, the company said.

Chief Executive Officer Gary Smith said the decision to cut jobs was "difficult," but he added that the resultant cost savings "make it a necessary step in the process of restoring Ciena's profitability."

In mid-February, Ciena reported a quarterly loss of $76.71 million, or 16 cents per share, on sales of $66.41 million for its fiscal first quarter, its 10th consecutive quarterly loss .

The company reaffirmed yesterday that it expects revenue to be as much as 20 percent higher in the current quarter than in the first quarter.

The company previously promised to cut its operating expenses by 10 percent to 20 percent during this fiscal year, generating yearly savings of $60 million to $70 million. Ciena expects the moves announced yesterday to allow it to achieve that goal.

The fourth-largest U.S. maker of networking gear has pared its work force by more than 2,000 since employment peaked at about 3,900 in late 2001.

The 425 firings equate to nearly a quarter of its remaining work force, which the company said totaled 1,778 at the end of the last quarter.

Ciena would not say how many employees it has in Maryland and said it is too early to say precisely how many people will be transferred here by the time the San Jose facility is closed.

The San Jose site is the former headquarters of ONI Systems, which Ciena bought in 2002.

Ciena will be transferring work from the California facility to Linthicum; Alpharetta, Ga.; and Research Triangle, N.C.

While noting that its network-infrastructure-equipment business is expected to remain flat for the next few years - while its service-delivery product sector is expected to grow - Ciena said it wants to maintain its diversity and is adding wares through acquisition.

In February, the company said it was purchasing two privately held equipment makers for $637 million in stock.

The company's shares lost 8 cents to $4.83 yesterday and are down 1.7 percent this year. They traded at $151 in October 2000.

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