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Optical/IP

Optical Scythe Swings On

More than 130,000 people have lost their jobs to the downturn in optical networking, according to an ongoing survey by Light Reading. But recent reports indicate the end may be in view.

Updates posted today to the report Grim Reaping: A Downturn Tally indicate that since last month, another 40,000-odd employees have been laid off -- or are earmarked for the cut within this quarter.

New layoff news came during the recent spate of earnings announcements. Among the hardest hit: Corning Inc. (NYSE: GLW) -- see Corning Downsizing Photonics; JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU) -- see Sizing Up JDSU's Massive Loss; and Lucent Technologies Inc. (NYSE: LU) -- see Lucent's Hopes Dimming.

Twenty-five of the 40 companies in the Light Reading Index have announced substantial layoffs this year. And of that total, eleven have lost (or are losing) more than 25 percent of their workforce.

Private companies are suffering too. Late in July, Optical Micro Machines Inc. (OMM) announced the layoff of another 100 employees (see OMM-inous News). In addition, the company has discontinued its 3-D MEMS development and postponed its IPO.

But grim as the situation is, there are signs here and there that the worst may soon be behind us. In its latest earnings call, executives from Nortel Networks Corp. (NYSE/Toronto: NT) made it clear that no more bodies will be cut (see Has Nortel Hit Bottom?). And some former skeptics claim an improved prognosis for Lucent (see Levy's Lucent Call Boosts Stock).

Experts say no substantial improvement in optical fundamentals is likely to occur before the middle of next year, at the earliest.

- Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com Movers and shakers from more than 100 companies – including those listed above – will be speaking at Opticon 2001, Light Reading’s annual conference, being held in San Jose, California, August 13-16. Check it out at Opticon2001.

moon 12/4/2012 | 7:59:38 PM
re: Optical Scythe Swings On Besides OMM, heard about new round of layoffs @ Chorum. Can anyone confirm?
allidia 12/4/2012 | 7:59:36 PM
re: Optical Scythe Swings On Don't know about Chorum but heard and verified Sycamore had a second round that hit the Sirocco boys hard but overall was small <50.
sandiego 12/4/2012 | 7:59:34 PM
re: Optical Scythe Swings On and the likes of JDSU in particular:

Keep these three components in mind: [1] past market caps were not based on any kind of intelligence/insight/information/intuition concerning state of the OFC market, but rather a combination of VC and Investment Bank hype fanned by the hot winds of the media and good old George; [2] the so-called management savy of a company like Uniphase is absolutely nugatory given their $30+ billion buyout of little old SDL; [3] don't look at stock prices, look at market caps, and then so the math: it don't work out as a positive integer!!!

Who cares about jury-rigged entities like Uniphase and Co, look what's happened to the greatest idea-generator of the 20th Century -- Bell Labs -- that's a loss to humanity of a greater magnitude than all these ersatz startups and the UESs -- Uniphase, E-Tek, SDL -- Nortels, etc.

Next time Light Reading wants to do an interview with REAL OFC entrepreneurs, put a call to Taiwan and have a chat with the husband/wife team of E-Tek founders who built a solid company and then sold billions of $tock into the rising market of 99 and 2000. I want to know where THEY are putting their money today -- not Mr KK, et al.
MarcusWright 12/4/2012 | 7:59:32 PM
re: Optical Scythe Swings On Again, Nortel has made it very clear internally that their cuts will continue for a three-year window, beginning in December of 2000. They have continued to indicate through the entire downslide since December, each time when they make a cut, that "this is the last one, honest." Why are we suddenly putting belief in what they are saying, that no more bodies will be cut?

As a manager with a sizable budget in Nortel, I was sitting in a teleconference with executives in Brampton in December where they said over and over again: the next three years. We are only into six months of that period.

Do you actually believe a company press release when they say no more layoffs? What do you expect them to say? Let's put that announcement in the context of what any company would be expected to announce, how Nortel has contradicted themselves at each successive cut announcement, and in the face of the fact that they have announced internally that the downsizing will continue over a period of years.

The biggest slice of the 100,000-plus cuts in the optical industry have come from Nortel. They are the most significant player in today's piece. Their influence on the number of future cuts will continue to be the dominant indicator the extent of contraction in the industry. Hence, they need to be looked at with a more fine lens.


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