Ciena cuts 650 jobs

Optical networking and switching company Ciena Corp. said it has cut 650 jobs, or 22 percent of its workforce, because of the downturn in the telecommunications industry.

In February, the Linthicum, Md.-based company cut 400 jobs, also because of the slowdown in the telecom market.

"The telecom equipment market has changed dramatically in the last year, and we have to adjust to those changes if we are to maintain our leadership position in the industry," said Gary Smith, Ciena's president and CEO, in a statement yesterday.

Smith said the company's actions should help it become profitable, although he didn't specify when that might happen.

In February, Smith said several of the company's major customers reduced the amounts of equipment they had previously indicated they would purchase.

Ciena said the job cuts should produce an annual savings of $145 million to $155 million, including savings of $85 million to $90 million in operating costs.

The company said it will take a second-quarter restructuring charge of $125 million to $135 million related to the workforce reduction. In addition, Ciena said it would record a second-quarter charge of between $200 million to $225 million because of excess inventory of its long-haul transport products and purchase commitments from suppliers.

Ciena couldn't be reached for further comment.

Joe Gladue, an analyst at The Chapman Co. in Baltimore, said the news from Ciena is no surprise, given that the telecommunications industry has been in a serious downturn for the past year or so.

"Ciena tried to maintain its spending level in its investment in research and sales and marketing through the downturn, hoping to emerge stronger than its competition when the downturn is over," Gladue said. "But the downturn is deeper and longer than [the company] anticipated, and the demand for product given the downturn [isn't there], so they had to cut back."

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