January 5, 2001
On Thursday morning, ADC Telecommunications Inc. (Nasdaq: ADCT) handed pink slips to 400 employees in its systems integration division. Though the number of people let go is less than 2 percent of ADC’s more than 22,400 workforce, it’s a significant number of people to come from one unit of the company.
ADC’s systems integration division, a unit of its Integrated Solutions Group, helps service providers plan, design, and build public and private networks. The layoffs, no doubt, were partially caused by a slowdown in carrier spending and carrier consolidation amidst a general economic slowdown.
In corporate parlance, the layoffs were a “divisional initiative to increase profitability in order to meet business objectives,” according to ADC spokesman Rob Clark. The employees let go were mostly integration technicians and support staff, though some managers were let go as well, Clark says.
In the past, ADC executives have been quick to put down talk of carrier spending slowdowns, but it seems now their game face is wincing slightly (see ADC Shares Perk Up).
It's possible that ADC’s Integration Solutions Group got a little fat during the reorganization that took place while the company was merging with PairGain. At that time, ADC combined the software operations of its Wireless Systems Group with the Integrated Solutions Group.
During the nine months ending July 31, 2000, ADC’s Integrated Solutions Group saw its net sales increase 28.4 percent over the comparable 1999 time period.
ADC’s fiscal quarter ends on Jan. 31, and the company will announce its financial results for Q1 2001 during the last two weeks of February.
--Phil Harvey, senior editor, Light Reading http://www.lightreading.com
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