Optical networking equipment manufacturer JDS Uniphase Corp. said it will cut 5,000 jobs, or 20 percent of its work force, under a restructuring proposal announced Tuesday and warned that it will not meet expectations for its current quarter.
“Today we are responding aggressively to more difficult economic times with our global realignment program,” Jozef Straus, JDS co-chairman and CEO said in a telephone news conference.
The company reported pro forma net income of US$160 million or earnings per share of $0.14 for its third quarter ending March 31, compared to net income of $108 million or earnings per share of $0.11 for the same quarter last year, Tony Miller, JDS chief financial officer said in the conference. That matches the expectations of a panel of 31 analysts polled by First Call/Thomson Financial.
Third quarter sales of $920 million fell a little from the second quarter figure of $925 million, but were 90 per cent above the year-ago figure of $485 million.
The company will not meet average forecast earnings per share of $0.12 for the fourth quarter ending June 30, and now expects to earn $0.05 per share before restructuring charges, with $700 million in sales, Miller said.
JDS expects to take a one-time charge of about $400 million due to the job cuts, and from closing some smaller manufacturing plants in the United States and Canada and moving them to China, Miller said.
“We are streamlining our cost structure. It is quite painful to make these changes. During the third quarter, we experienced a very high level of (customer order) cancelations but we believe that cancellations have run their course or are close to running its course,” Miller said.
Miller stressed that though cancellations were high, “long-term agreements remain very much intact.”
As part of its realignment program, JDS will vacate about 25 of its buildings, consolidate a number of its product lines and create global centers for advanced product development, Straus said.
“We remain confident about the growth prospect for the optical networking market and believe that current global conditions are only temporary,” Straus said.
There had been media speculation that JDS was to announce plans to buy Lucent Technologies Inc.’s Optical Fiber Solutions unit, though either company made no such announcement Tuesday.
JDS is among several potential buyers, including Corning Inc., Alcatel SA and Pirelli SpA that have informally expressed an interest in acquiring Lucent’s optical-fibre business. Based in Norcross, Ga., Lucent’s optical unit employs 6,000 people and is second only to Corning in the production of fiber-optic cable. It could fetch between US$4 billion and $8 billion for the troubled telecommunication equipment provider.
JDS did not directly address the prospect of a deal with Lucent but when asked about the possibility of future acquisitions by JDS, Straus replied, “we will continue to look around for what’s necessary to complement our product line.”
“On the financial side, the price for what we would consider buying anything has come down considerably,” Miller added.
JDS Uniphase, in San Jose, Calif. and Nepean, Ont., can be reached at http://www.jdsuniphase.com/.