Corning Slams on the Brakes
Corning Inc. (NYSE: GLW) continued down the downsize path, as it announced it would close additional plants and continue to cut costs in light of a significant net loss in its third-quarter results announced this morning (see Corning Meets Low Expectations).
Most significantly for the optical market, Corning officials said the company would take further cost-cutting measures, including "idling" the manufacture of optical fiber and possibly closing its fiber optic manufacturing facility in Deeside, North Wales, U.K. The company will also shut down its photonics manufacturing plant in Henrietta, N.Y.
Including the plant closings, the company will further reduce its workforce through layoffs and an early retirement program. It now plans to cut 12,000 jobs, up from the 8,000 that were previously announced, according to Corning officials.
The company had previously announced it would take a $339 million restructuring charge and could take up to $1 billion in restructuring charges by the end of the year (see Corning Cuts Again).
In its third-quarter 2001 results, Corning announced pro forma earnings of $85 million, or $0.09 per share, slightly better than the expectations set after the company's warning earlier in the month, but a decrease of 74 percent from the comparable period last year. After including the results of a previously disclosed $339 million restructuring charge, the company's net loss for the quarter totaled $220 million, or $0.24 per share. This compares with third-quarter 2000 net income of $254 million, or $0.28 per share.
"Our focus is now very narrow," said CEO John Loose. "Our first objective is to get to cash-flow neutrality as fast as possible. This is the toughest environment Corning has been in in a long time."
On the conference call, Loose described the company's declining business as a series of "body blows," in which it responded step-by-step to a slowing economy, particularly in the telecom market. The fourth "body blow," according to Loose, was the economic slowdown following the terrorist attacks of Sept. 11.
"The downturn has been most pronounced within the telecommunications market, where conditions changed so abruptly and with such severity that the impact on our business is unprecedented." In outlining financial guidance for the rest of the year, Corning CFO James B. Flaws said the company is aiming for $1 billion in revenue in the fourth quarter, with a pro forma loss of 20 to 25 cents per share.
"Business in our industry remains foggy," said Flaws.
-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com