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Employment

Ciena Slashes Some More

Ciena Corp. (Nasdaq: CIEN) announced today that it would be cutting another 650 jobs from its roster (see Ciena Lays Off 22 Percent).

"The telecom equipment market has changed dramatically in the last year and we have to adjust to those changes if we are to maintain our leadership position in the industry," said Gary Smith, president and CEO of Ciena in a prepared statement. "Ciena's future success depends on our ability to adapt the way we think and the way we run our business in this dynamic environment."

This is the third round of layoffs the company has announced in the past six months. In November 2001 it announced it would cut 380 jobs, and in February 2002 it announced it would cut 400 (see Ciena Boosts Numbers, Cuts Jobs). After this latest round, the company will have a headcount of 2,275.

The latest cuts are directly related to the drop in demand from two of Ciena’s main customers, a situation that was announced last month during the company’s first-quarter 2002 earnings call, says Glenn Jasper, a spokesperson for the company (see Ciena: Outlook Dim). Though the company never mentioned which customers had pulled back on orders, the general feeling in the industry is that it was Qwest Communications International Inc. (NYSE: Q) and Sprint Corp. (NYSE: FON).

“The information we received just before our Q1 earnings call certainly has something to do with today’s layoff,” Jasper says. “We realized we just couldn’t support the current headcount based on the new information that was given.”

The layoffs come as no surprise to investors either. At midday Ciena's stock was trading up slightly $0.015 (1.80%) to $8.50.

Some Wall Street analysts said they were happy with the news, because it makes the company leaner in the tough times.

"It’s good to see them making the tough decisions they need to make," says Rick Schafer, an analyst with CIBC World Markets. "Visibility is not improving."

The job cuts are projected to effect $145 million to $155 million in annualized cost savings, including approximately $85 million to $90 million at the operating expense level, prior to restructuring-related charges. Ciena expects that the majority of the cost savings will be in place by its Q3 2002.

Employees affected by the layoff, most of whom reside in the Washington and Baltimore areas, will be paid through May 24, 2002. Depending on tenure, they will also be eligible for additional severance packages and will receive outplacement assistance and training, according to the news release.

For the second quarter of 2002, the company expects to record a restructuring charge between $125 million and $135 million associated with the layoffs, lease terminations, non-cancellable lease costs, and the write-down of certain property, equipment, and leasehold improvements. This is on top of the $9 million to $11 million charge it expects in Q2 for the February job cuts. The company also anticipates a charge of about $200 million to $225 million, related to excess inventory.

But Schafer says that he doesn’t expect the new layoffs to affect the company’s cash burn rate significantly this year, and it lowers the break-even point. Instead of a break-even at around $300 million, Schafer says he now expects it to be around $250 million. He also expects the company to burn through about $50 million in cash per quarter. This, coupled with the approximately $150 million in debt inherited from the Cyras acquisition along with the cash charges for restructuring, mean that the company will likely burn about $400 million this year. But with over $1 billion in cash on hand, Schafer says this is not too alarming.

“Ciena is a survivor,” he says. “And they are trying to make good strategic moves so that when things pick up again they will emerge as an effective player.” One question left still unanswered is what will happen to the roughly 700 employees that work for ONI Systems Inc. (Nasdaq: ONIS). Ciena announced back in February that it would acquire the company (see Ciena and ONI: Wedding of the Year?). Last October, ONI also trimmed its expenses with a 16 percent workforce cut (see ONI Slims Down ).

Jasper would not comment on the merger or what will likely happen to the new employees. As for future layoffs, he says that today’s measure “dramatically lessens the likelihood that we will have more reductions.

“Obviously, we continue to monitor the environment. And we’ll make the decisions we have to make.”

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com
fleshpeddler 12/4/2012 | 10:20:36 PM
re: Ciena Slashes Some More they are losing almost 1/2 their headcount.
sonet49er 12/4/2012 | 10:20:37 PM
re: Ciena Slashes Some More In a rare move I find myself somewhat in agreement with BobbyMax aka HarveyMudd.

The price tag was less than $4 Billion and I do believe Ciena was not worth the $40/share it was trading at the day the Cyras deal closed.

If you do read the filing of the deal under history of the deal there were performance clauses in the deal, the mistake made was waiving them once "Company B" entered the picture as a rival acquirer.
k_j 12/4/2012 | 10:20:37 PM
re: Ciena Slashes Some More A friend of mine mentioned things were not looking as fantastic as hoped.

Are rumors true?
BobbyMax 12/4/2012 | 10:25:05 PM
re: Ciena Slashes Some More Ciena paid over 4 Billion dollars to acquire Cyras. This was tghe bigesy risky adventure for Ciena and the company is paying a big price for its misadventures. It paid too much but got very little as far as any meaningful product is concerned. Tgey boght the company without proper due dilligence.
nagogpark2002 12/4/2012 | 10:41:48 PM
re: Ciena Slashes Some More Anybody heard how this company is doing? One of my ex-colleagues recently layed off at Ciena got hired at Gotham. I read somewhere that they had are having success in soem customer trails. How come no official news?
smokeNmirrors 12/4/2012 | 10:41:51 PM
re: Ciena Slashes Some More Although this has been a rumor for years, I think this may soon be a reality. Too much recent coverage in stock chats, and too many layoffs at CIEN. It actually makes sense.

CIEN: Wait for ONI Acquisition to be completed. Drop K2, Drop CIEN Metro, Keep CoreDirector, Keep ONI Metro and LH/ULH (Corestream??) Products.

CSCO: Monterrey Dead (Need CoreDirector), Drop Pirelli (Use Corestream), Drop Metro (Use ONI), Keep 15454 (Kill K2).

Could spell trouble for NT & LU.

The only thing CSCO would not have is a legacy voice story. They will just hope that VoIP will take off.

Interesting........
gustro 12/4/2012 | 10:42:03 PM
re: Ciena Slashes Some More It should be fairly obvious at this point, why I still work for a living(and not as an investor). I got a little caught up in the moment and slipped into 'win one for the Gipper' mode.
PhotonGolf 12/4/2012 | 10:42:10 PM
re: Ciena Slashes Some More Gusto ...

Your credibility was so high before that last sentence!

- P
gustro 12/4/2012 | 10:42:14 PM
re: Ciena Slashes Some More Just to clear the air about Ciena and supporting the CoreDirector. Around 10% of the organization for CD support has been let go. Whoever got the 36 reduced to 4 numbers probably smoked enough ganja that the numbers were transposed. Try letting 4 of 36 sink in. Otherwise it was clearing the way for the intergration of product lines with ONI. So if you would like a nice way to make some money, buy now.
VinceW 12/4/2012 | 10:42:35 PM
re: Ciena Slashes Some More puddnhead,

You are being much too kind to this clown. The good news is that he probably wonGÇÖt be writing for the business world very long. My favorite sentence was: GÇ£Even though we had accused CIENA management of being in a permanent state of denial on the subject, we naturally assumed that that was just part of the normal defensive carapace of a beleaguered management - not really to be approved of but sufficiently common to be seen as sadly understandable.GÇ¥

Two bits says that THEY have no concept of why WE are laughing so loud. LOLLLLLLLL
puddnhead_wilson 12/4/2012 | 10:42:35 PM
re: Ciena Slashes Some More >puddnhead... quite appropriate. DO you know dave7777?

I don't know. Do I? What is your point, to be intentionally obscure? Does it have anything whatsoever to do with the subject of the thread? (my guess is not).
zweisel 12/4/2012 | 10:42:38 PM
re: Ciena Slashes Some More puddnhead... quite appropriate. DO you know dave7777?
puddnhead_wilson 12/4/2012 | 10:42:48 PM
re: Ciena Slashes Some More >Our comments yesterday that CIENA, with under $100 million in sales this quarter, had to be losing share seemed to us so self-evident that some abusive comment on the Light Reading message board (that we had "provided no facts") struck us rather by surprise! Even though we had accused CIENA management of being in a permanent state of denial on the subject, we naturally assumed that that was just part of the normal defensive carapace of a beleaguered management - not really to be approved of but sufficiently common to be seen as sadly understandable. The fact that a real person, unencumbered by politics, could be equally confused struck us as odd;

LOL, the fact that you

1) take the comment 'they do not KNOW they are losing market share, but only SUPPOSE it' as "abuse",

2) draw all of your conslusions from one quarter's results in an industry with notoriously "lumpy" revenues, and

3) are apparently employed as a professional journalist, but also emply the royal "we" -- and in senetences averaging about 50 words each at that!

strikes "us" as rather odd too! :)

Take the chip off your shoulder, please.
JohnFarrell 12/4/2012 | 10:42:54 PM
re: Ciena Slashes Some More Our comments yesterday that CIENA, with under $100 million in sales this quarter, had to be losing share seemed to us so self-evident that some abusive comment on the Light Reading message board (that we had "provided no facts") struck us rather by surprise! Even though we had accused CIENA management of being in a permanent state of denial on the subject, we naturally assumed that that was just part of the normal defensive carapace of a beleaguered management - not really to be approved of but sufficiently common to be seen as sadly understandable.

The fact that a real person, unencumbered by politics, could be equally confused struck us as odd;
inlight 12/4/2012 | 10:43:00 PM
re: Ciena Slashes Some More It has nothing to do with CIena, but every thing to do with "Slashes"!

Not happy to know about it though!
wbe 12/4/2012 | 10:43:07 PM
re: Ciena Slashes Some More I heard rumors that there has been a layoff at White Rock Networks today. About 30% of 220 employees were let go.
indawings 12/4/2012 | 10:43:16 PM
re: Ciena Slashes Some More they will never have that information to share. there are many details they have left out of the announcement so questions aren't asked. other things were mentioned to distract attention. there were other offices that were shut down and facilities closed. tech support was hard hit on the coredirector side. Other cuts hit the switching group harder than they want to admit. one reason is that it is well hidden is the way the departments are organized. watching what is basically still a transport company mentality trying to pretend they are transforming into a switching business is really unsettling. they try to talk the talk, but if it walks like a duck, and quacks like a duck, it is still a duck. they are still basically a transport company that stumbled into a switching product. this was not a forward thinking rif and will be one they will wish they could do over again. it is done and hopefully the next rif will have the right people making the decisions if it is not too late already. their bold plan to become the leader in the new market is so far laying nothing but infertile eggs with very weak shells. will they get it together? only time will tell, but performance to date is terrible. their switching products are best of breed but understanding what to do with it and how to support it is looking to be their undoing.
switch625 12/4/2012 | 10:43:17 PM
re: Ciena Slashes Some More Umm...not to sound stupid or anything, but what does this have to do with Ciena? (just wondering...no snotty comebacks please).
inlight 12/4/2012 | 10:43:19 PM
re: Ciena Slashes Some More General Bandwidth cuts 42 from its Austin work force
By Kirk Ladendorf

American-Statesman Staff

Wednesday, March 27, 2002

General Bandwidth Inc. on Tuesday cut 20 percent of its work force, or about 50 workers companywide, in a move to reduce its spending in the face of continued weak sales of telecommunications equipment.

In Austin, 42 General Bandwidth workers lost their jobs.

The 3-year-old Austin startup, which also has a research and development center in Richardson, is a leading supplier of cost-effective voice and data service equipment for high-speed digital phone lines.

The company's managers said General Bandwidth cut the jobs to give it a larger financial cushion to wait out the soft telecom market. With Tuesday's job cuts, manage- ment estimates that the company has the funds to operate "well into 2004." The company eliminated 30 jobs in October in a previous cost-cutting move.

The employees released Tuesday "were fantastic workers," said chief executive Brendon Mills. "It really hurts us to have to do this. There were a lot of tears today."

Telecommunications equipment, which was the leader in driving high-tech sales in the late 1990s, has slumped more severely than most technology sectors since mid-2000. The industry boomed in the late 1990s as Internet traffic exploded and newcomers rushed in to compete with established telephone companies. Many of those weakly financed newcomers have gone belly up.

General Bandwidth avoided most of the industry's early troubles because it concentrated its sales efforts on the nation's largest communications companies, including the regional Bell operating companies such as San Antonio's SBC Communications Inc.

But with increased competition and a slowing economy, the industry giants also have slowed their spending dramatically to shore up earnings. That industry weakness puts pressure on equipment vendors that had expected telephone companies to be ready to make major purchases from them this year.

"There is enormous pressure today even on the largest and strongest players in the industry," said analyst Cynthia Brumfield with Broadband Intelligence in Bethesda, Md. "They are in a tough bind."

The job cuts at General Bandwidth, which included some engineering jobs, left the company with about 195 workers in Austin and Richardson. About 155 of those workers are in Austin.

General Bandwidth has raised almost $150 million in four investment rounds, including $66 million in July. The company has had to spend heavily to perfect its technology and develop the hardware and software necessary for its products, which go into telephone switching offices.

Its "voice-over-broadband" equipment began selling to smaller telecom service companies late last year, but revenues are behind projections because the nation's major communications companies have slashed their equipment spending in reaction to the slowing economy.

Although some industry experts are hopeful that the telecom industry will begin to recover late this year, Mills said it looks as if communications companies may wait another year before they start increasing spending on new equipment.


[email protected]; 445-3622
VinceW 12/4/2012 | 10:43:19 PM
re: Ciena Slashes Some More I agree, there is nothing wrong in wondering why I would seek to challenge GÇ£factsGÇ¥. I also think it is okay and appropriate to challenge whether or not those GÇ£factsGÇ¥ you refer to are really facts or hearsay or partial truths or pure bullshit. To that end, knowing the source from the source is important. Where the reductions were is important to me. Whether or not that is important to you is not important to me.

BTW-posting twice was just an accident but now that I know it got under your skin, I'll put it in my bag for our next encounter. lol
VinceW 12/4/2012 | 10:43:20 PM
re: Ciena Slashes Some More clarifying your source. Knowing where information comes from is alwasys helpful.

I understand your concern about support. Hopefully your company will not see any degradation in service/support quality.

My experience is that while RIF'ed employees almost always deserve and need empathy and support, they are not always unbiased in their assessment of the company that let them go. This is very understandable and not intended to be a negative shot. Let's hope they all land with their feet on the ground.


Phonon-Ex 12/4/2012 | 10:43:21 PM
re: Ciena Slashes Some More I personally neither own nor short
CIEN. I too see nothing wrong
in wondering why you would challenge
or seek to challenge "facts" that at
best, seem to be just frosting on
the RIF cake.

Why not use the Post key once, instead
of twice, unless you have a good reason
to do that too.
dave77777 12/4/2012 | 10:43:22 PM
re: Ciena Slashes Some More Yeah we all know you NT groupies have no agenda lmao.

BTW, did you know NT was cashflow negative way back in 1999? lol they couldn't make real money even in a good market.
ivehadit 12/4/2012 | 10:43:23 PM
re: Ciena Slashes Some More bezlebutt,
i totally agree. the writings on the wall. the corvis guys split hairs until eternity. ciena's crowd is doing the same. one of the fundamentals of investing is: get the emotion out of your judgement.
optical_maverick 12/4/2012 | 10:43:24 PM
re: Ciena Slashes Some More Bro, who cares.

Regards,

Mavi
Belzebutt 12/4/2012 | 10:43:24 PM
re: Ciena Slashes Some More The CIEN groupies here are getting almost as bad as the CORV groupies. Posting innuendo and articles about other companies is perfectly ok, but post one on their favorite stock, and you're accused of having an agenda.
VinceW 12/4/2012 | 10:43:24 PM
re: Ciena Slashes Some More are you answering or providing a vague answer to a question(s) that were not asked of you? How does your speculation on top of edwardly's unsourced statements have any credibility at all. As it relates to this discussion, the only agenda that I have that is challenging people who do not substatiate statements made about companies that I consider investment opportunities.
VinceW 12/4/2012 | 10:43:25 PM
re: Ciena Slashes Some More are you answering a providing a vague answer to a question(s) that were not asked of you? How does your speculation on top of edwardly's unsourced statements have any credibility at all. As it relates to this discussion, the only agenda that I have that is challenging people who do not substatiate statements made about companies that I consider investment opportunities.
darkhorse 12/4/2012 | 10:43:25 PM
re: Ciena Slashes Some More First, I intend no innuendo. My concerns are my concerns regarding my ability to get support for a product that in my network. As far as where I get my information, I have spoken with the employees that have been affected in the RIF. If you would like it verified, I am sure that Ciena Corporate information would be glad to give you the information when they have it.
darkhorse 12/4/2012 | 10:43:26 PM
re: Ciena Slashes Some More I haven't heard anything about the Atlanta issue but i am aware of them laying off quite a few in the Mass area. As far as credability, I ask you to prove me wrong. There is on TSE in Dallas and he is contractually committed to a carrier.
puddnhead_wilson 12/4/2012 | 10:43:26 PM
re: Ciena Slashes Some More >puddnhead_wilson, i don't want an argument. you're in denial.

I have denied nothing about CIENA's condition, all I have done is point out your distortion of others' words on the topic. This time it is MY words you are either misreading or misstating.
Phonon-Ex 12/4/2012 | 10:43:26 PM
re: Ciena Slashes Some More Good job on the detective work Darkhorse.
You have perhaps pi$$ed off a bunch of
CIENA stockholder/employees posting
on this thread. Have you heard anything
about the CIENA Atlanta plant lay-offs?
That's their metro division I think,
which may become redundant if the ONIS
merger is approved
Phonon-Ex 12/4/2012 | 10:43:26 PM
re: Ciena Slashes Some More VinceW

I cant tell from your post whether you
are curious or worried, which if you
are tells me that you are either employed
by Ciena, or are a stockholder. To answer
your question, this info probably became
available from laid-off employees,ie,
highly-credible sources
ivehadit 12/4/2012 | 10:43:26 PM
re: Ciena Slashes Some More puddnhead_wilson,
i don't want an argument. you're in denial.

i found it interesting that a respectable organization like optical keyhole substantiated an observation of mine. another post on this thread suggests ciena is cutting back on coredirector support when everyone in the industry is ramping up on intelligent switching. all that suggests something.

good luck. i don't have any agenda.
puddnhead_wilson 12/4/2012 | 10:43:28 PM
re: Ciena Slashes Some More iuvehadit, in your posts here you continue to say things with no support, or just misstate what others write. For example you most recently wrote:

>optical keyhole also says ciena's losing market share...

The closest thing I can see in this article to that is:

"The possibility that the company, despite still being perhaps a technical leader in some areas, might nonetheless be losing share, seems to be regarded as axiomatically inadmissible by the company's management and "share groupies" alike."

i.e. you take "it's possible they could be losing share" and change it to "ciena IS losing share."

Either learn to read, or reveal your agenda.

p.s. what an overwrought piece of writing that article is. Not to mention the information content is nearly zero (no facts, just usnsupported suppositions and obtuse references to WWI!) Even their argument about Sprint and Quest cuts not explaining all of the recent revenue shortfall is bizarre. Ciena isn't even remotely suggesting that other customers aren't limiting purchases too. Duh.
VinceW 12/4/2012 | 10:43:29 PM
re: Ciena Slashes Some More Where did you get your information that CD tech support was reduced from 36 to 6? Where did you get your information about lay offs of all tech support in Dallas and Tulsa? When did that happen? How many people were laid off in Dallas and Tulsa? If you can back up your statements with vefifiable sources, please include them with you messages. If you can't then please explain why are you making these statements and raising innuendos about Ciena not supporting their products?
darkhorse 12/4/2012 | 10:43:30 PM
re: Ciena Slashes Some More The states that most of the layoffs have come in the Washington-Baltimore area. Intresting...The have laid off all tech support in Dallas and Tulsa. The have reduced their Core Director Tech support from 36 to six. Are the planning on not supporting their switch?
ivehadit 12/4/2012 | 10:43:30 PM
re: Ciena Slashes Some More to continue the other thread here, optical keyhole also says ciena's losing market share...

http://www.opticalkeyhole.com/...

owl-light 12/4/2012 | 10:43:32 PM
re: Ciena Slashes Some More ... that's "capital", less anyone get too excited.
owl-light 12/4/2012 | 10:43:32 PM
re: Ciena Slashes Some More "But with over $1 billion in cash on hand, Schafer says this is not too alarming."

And still no concern over the alarming deficit in moral captital. Just another example of a company in an industry that continues to attempt to shift the blame away from themselves to such easy targets as CLEC and RBOC spending. When their deconstruction was inherent and inevitable from their beginnings; fueled by investor hype, lying leadership and greedy practitioners. What if truth were as prevalent as stock options and courage as prevalent as chipsets? They don't deserve to, but they are needed and will survive; much like Congress, our education system and other such fine things.
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