Optisphere: Is It Safe?

Optisphere says it hasn't been hit by cost cuts yet, though parent company Siemens hasn't finished swinging its axe

August 10, 2001

2 Min Read
Optisphere: Is It Safe?

Siemens AG (NYSE: SI; Frankfurt: SIE) is still weighing several options for how it will cut costs in its Information and Communications Network (ICN) unit, the company says.

According to an The Associated Press report today, the company is reportedly considering cutting another 3,000 jobs. "That is one scenario out of many," a Siemens spokesperson in Germany told the AP. Siemens' decision "will be more clearly defined over the coming weeks."

Meanwhile, Optisphere Networks Inc., the Siemens optical networking subsidiary that is part of the much larger ICN unit, says it hasn't been touched by layoffs yet and, as late as last week, was told that it wouldn't feel the axe. "We're a pretty lean and mean group as it is, and they haven't touched us so far," says Optisphere's optimistic director of breakthrough marketing, Dawn Yarbrough.

Optisphere makes optical transport, routing, and aggregation gear for long-haul, metropolitan, and access networks. It employs about 200 people.

One staff change might have caused internal speculation as to Optisphere's future, Yarbrough says. In the next couple of weeks, Optisphere's Tom Phillips will take over for Reiner Schoenrock as the public relations manager for Siemens' ICN unit. Schoenrock is leaving to join Infineon Technologies AG (NYSE/Frankfurt: IFX) as director of media relations.

Siemens' Boca Raton, Florida-based ICN unit includes subsidiaries such as Siemens Carrier Networks LLC, Siemens Enterprise Networks LLC, Optisphere, and Unisphere Networks Inc. (Nasdaq: UNSP), which filed for an initial public offering in August 2000.

The ICN unit lost about $503 million during Siemens' most recent quarter, and the parent company vowed to cut costs significantly. A few weeks ago Siemens said it aimed to trim the unit's expenses by about $1.073 billion. A bit later, that number was raised to about $1.8 billion.

A week ago, Financial Times Deutschland reported that Siemens was planning to make 5,000 additional job cuts from the ICN unit. The paper said that ICN might lose up to 20 percent more of its staff worldwide -- or about 5,000 people -- on top of the 5,500 that have already been let go from the unit this year (see Siemens Weighs Optisphere Options).

Siemens dismissed the layoff numbers cited in that article as speculation.

It's likely that a final decision won't be made on the cost cutting until the ICN unit's new president takes his post. Thomas Ganswindt, of Siemens' transportation group, is set to succeed Roland Koch as Siemens' ICN boss in about two weeks (see Nortel to Grab Koch?).

- Phil Harvey, Senior Editor, Light Reading

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