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Headcount: More Cuts ComingHeadcount: More Cuts Coming

The recession ain't really over, Ciena and Cisco keep cutting, and Metro-Optix sells itself, post mortem

September 9, 2003

4 Min Read
Headcount: More Cuts Coming

The recession may be "officially" over (like the war in Iraq), but companies in and out of telecom are still slashing jobs with wild abandon.

In August, employers slashed payrolls in the U.S. at their fastest rate since March, according to the latest figures from the Labor Department. U.S. employers cut roughly 93,000 workers from their payrolls during the month, the seventh consecutive month of reductions. The news took many economists by surprise, as they had been expecting the opposite.

The news was no surprise to telecom workers, many of whom are still getting pink slips as we speak. Or type. Or read. Whatever...

Anyway, it's time to have a look at some of the most interesting hirings and firings of the last several days:

  • Despite efforts to keep its downsizing on the down-low, Ciena Corp. (Nasdaq: CIEN) says it has cut another 280 employees. Aaron Graham, a Ciena spokesman, says the cuts happened on Wednesday and were made across all departments. The company ended the third quarter of fiscal 2003 with 2,024 employees, but word on the street is that at least 150 jobs were cut from the company’s research and development facility in the San Francisco Bay Area, which it acquired when it bought ONI Systems. Graham would not comment on specifics.

  • Ciena isn’t the only company trying to keep its continuous cuts quiet. Cisco Systems Inc. (Nasdaq: CSCO) eliminates hundreds of jobs every quarter in an effort to shed under-performing employees. Even though it’s eliminated more than 2,000 jobs since February 2002, it still maintains that it has not had any significant layoffs. Cisco’s headcount, as of the end of July, is 34,466.

  • Procket’s interim CEO, Paul Matteucci, has finally gotten down to business. Last week, the company cut around 13 percent of its workforce, according to Matteucci. He said cuts were distributed throughout the company with no single area being affected more than another. While some claim that this is only the first in a series of layoffs, Matteucci says he doesn't predict any further staffing reductions.

    "Procket is currently at the employement level we want going forward, and one that we believe is sustainable in the current environment," he wrote in an email to Light Reading. "If we perform as expected, we would expect to grow our workforce, not to shrink it."

    The company’s last staff reduction was in May, leaving the company with 265 employees (see Headcount: Viva la Cinco de Mayo!). Company officials did not return calls for comment on this story. But considering that many of them had left the company before the cuts, it’s little surprise.

    Matteucci took over in June after the former CEO, Randall Kruep, left (see Procket CEO Resigns). With a burn rate rumored to be $5 million to $6 million per month, Matteucci has his work cutting workers cut out for him (see Procket Plows On). But he claims that headcount reductions are only a small part of the company's strategy for slashing its burn rate.

  • After several weeks of intense negotiations between Verizon Communications Inc. (NYSE: VZ) officials and union representatives, a contract agreement between the two parties was finalized last week (see Verizon Inks Deal With Unions).

    While neither party hit a home-run in terms of the deal, each side seemed to have gotten a little bit of what it wanted. In exchange for the ability to limit wages and healthcare costs, workers took an immediate cash bonus of 3 percent, averaging $1,600, as well as guaranteed base wage increases in 2004 through 2007.

    Verizon customers were the biggest winners of all, considering that 79,000 workers could have walked out on the job, which would likely have had some slight effect on service.

  • After Metro-Optix shut down in July, Kris Shankar, former vice president of marketing and business development at the startup, stuck around to help search for someone to buy the company’s assets (see Metro-Optix Pulls the Plug). Not only did he find a buyer, but he also scored himself a new job with the new bosses. Shankar will retain his title and position at Xtera Communications Inc., which announced it was buying the company’s assets last week (see Xtera Nabs Metro-Optix Assets). In Xtera’s press release at the time of the acquisition, the company said that Shankar would be joining Xtera, “to ensure institutional and product continuity.”

    Here's a summary of other industry appointments (and disappointments) from the past several days:

    • Agilent: Ipswich Lives!

    • Kevin Kennedy Gets His Dream Job

    • Aurora Hires 'Scotty' Flink

    • Avanex Promotes Weinswig

    • China's CECT Names CEO

    • Sagitta VP Heads TIA Group

    • Eagle Broadband Lands CEO, $10M

    • MCI Adds Five to Board

    We're always looking for some good clean dirt for the next edition of Headcount, so send your tips to [email protected].

    — Marguerite Reardon, Senior Editor, Light Reading

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