Corning Continues Restructuring
Why the improved earnings per share? Partly because the company is downsizing as fast as it can, after missing its quarterly revenue projection by at least $25 million.
Indeed, Corning's other announcement was that it will cut more jobs, close more plants, eliminate more research and development facilities, and consider "divesting several small businesses, investments, or equity companies."
Corning also said its president and CEO, John Loose, will retire from Corning on April 25, at the company's annual shareholder's meeting (see Corning Takes Executive Action).
Regarding its losses, Corning said that it expects to report a net loss of about 10 cents a share for its first quarter ending March 31 -- 7 cents better than Wall Street's predictions.
On February 8, Corning told investors that it expected a net loss of 14 to 18 cents a share and revenues between $925 million and $950 million during the quarter. On Monday, however, the company revised that estimate downward, to about $900 million.
Though Corning has not yet detailed how many jobs will be cut in the next few months, it is clear that its business didn't stop deteriorating during the first three months of 2002.
"We believe the restructuring actions... were originally slated for the middle of 2002, and we view accelerated restructuring efforts as evidence that a sustained rebound in the company’s business is unlikely during 2H02," writes Morgan Stanley's David Jackson, in a note to clients on Monday. Jackson maintains that it's too early to call the bottom of the fiber market (see Corning Closing on SBC Fiber Deal).
That said, the company is not short on cash; it had more than $1.8 billion in cash and short-term investments at the end of the quarter.
John Loose's departure marks the beginning of a new chapter at Corning. Loose, 60, has worked at Corning for 38 years (see Corning CEO Likes Lasers, China ). In a statement, Loose said that having just turned 60, he looked forward to spending more time with his family and pursuing other interests.
Corning's board picked Chairman James Houghton, 66, as Loose's replacement. Houghton originally joined Corning in 1962 and has been on the company's board since 1969. He was Corning's chairman and CEO from 1983 to 1996.
The board has picked Wendell Weeks, currently president of Corning Optical Communications, as Corning's next president and COO. James B. Flaws, Corning's CFO, was picked to be vice chairman.
In a prepared statement, Weeks asserts that though the telecom pie is getting smaller, Corning's slice has stayed the same. "Although Corning has lost revenue during this market recession, we have not lost market share. We remain convinced that we have positioned Corning in the right industries and for long-term growth."
Weeks' successor at Corning Optical Communications hasn't been decided, according to spokesman Paul Rogoski.
— Phil Harvey, Senior Editor, Light Reading