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Employment

Infinera Restructures as It Absorbs Coriant

Infinera said it will take a charge against earnings in the range of $6 million to $8 million related to a restructuring that's going on right now.

The company said in a filing with the Securities and Exchange Commission (SEC) that this charge covers "severance and employee-related costs."

When asked to comment by Light Reading, Infinera declined to reveal how many people it is cutting as part of the restructuring. When the company closed its acquisition of Coriant, the company said it was adding approximately 2,100 employees, over 1,600 patents and more than 600 customers globally. (See The New Infinera Is Already on Edge and Infinera, Coriant Hear a $430M Siren Song of Synergy .)

Infinera's December 10 SEC filing reimagined as Santa's naughty list.
Infinera's December 10 SEC filing reimagined as Santa's naughty list.

By itself, Infinera employed 2,145 people as of December 30, 2017; about 1,003 of those employees were outside the US. Given that background, one could start counting back from 4,245 to find out the possible severity of the company's latest rounds of cuts.

Several challenges are ahead for Infinera as it slims down its operations. The company has to retain a key customer with CenturyLink Inc. (NYSE: CTL) and Level 3, where it has a significant amount of long-haul WDM business to protect. It also needs to successfully integrate its ICE offerings into Coriant's products to get to the kind of price and performance metrics that will help it reach the $250 million in merger synergies it said it would hit by 2021. (See Infinera Shifts Up a Gear With Its Latest Optical Engine and Infinera's Integration Situation Needs More Explanation.)

— Phil Harvey, US News Editor, Light Reading

Duh! 12/17/2018 | 10:09:52 AM
Re: No Surprise I stand corrected. Credit for that observation should go to Scott Wilkinson.
Keebler 12/17/2018 | 9:55:18 AM
Re: No Surprise Just a small correction (and thank you for the reference). It was a Cignal AI report that stated Infinera could be a strong #2. And while Cignal AI used to just be Andrew, there's another guy doing the optical hardware analysis now. He's pretty good, too. And modest.
Duh! 12/14/2018 | 2:18:30 PM
No Surprise It goes without saying that M&A -- particularly the horizontal kind -- inevitably leads to layoffs. In fact, it's one of the main benefits.  Infinera was quite specific about this in their investor presentation in June: "(For) 2019: Operational Integration ~100M, 30% COGS, 70% OpEx. Near term synergies justify deal. Drive accretion in 2019. Enable payback within 3 years. (For)2020: Portfolio Optimization $75M, 30% COGS, 70% OpEx".

OpEx savings can include a lot of items like leases on redundant offices, duplicative services and volume discounts. Unfortunately, much of it is headcount. We'll see how many when they release their 10Q.

December is an extra lousy time to get laid off, but the timing has become so commonplace as to no longer be note-worthy. The good news is that the labor market is strong (not that that's a panacea). Good luck to all those who are leaving.

The good news for Infinera is that the (ex-Coriant) Groove 30 compact modular DWDM system has been doing well in the hot DCI space. In fact, Andrew Schmitt points out that the combined share makes Infinera a strong #2 to Ciena in DCI market share. DCI is the only sub-segment of the optical market that's showing double-digit growth.
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