Corning cuts 1,000 jobs, shuts plants and takes $5.1 B charge
Corning Inc. will close three manufacturing plants and cut 1,000 jobs to cut costs in its Photonic Technologies unit. The company also plans a $5.1 billion pre-tax charge in its second quarter, and announced it is discontinuing dividend payments on its common stock.
Corning says it will include the costs of the closures and layoffs in its third-quarter results. The $5.1 billion charge in the second quarter results from excess inventory writeoffs, and impaired goodwill and other costs from last year's acquisitions of NetOptix and Pirelli's optical components business.
By the end of 2001, Corning plans to close its facilities in Benton Township, Pa.; Nashua, N.H.; and Natick, Mass. The closures will eliminate 1,000 jobs, bringing Corning's total cuts since the beginning of the year to 3,500. Total job cuts for 2001 will be 5,900, or 15 percent of its global workforce, it says.
The closures will result in a third-quarter charge of $300 million to $400 million, 25 percent in cash. The cuts and closures will save the company an annual $150 million, it says, and Corning is "continuing to evaluate the need for further personnel reductions and other restructuring actions."
Company President and CEO John Loose cites reduced spending in the telecom industry and the downturn forecast of 12 months to 18 months for the decision. The unit develops and makes photonic products such as erbium-doped amplifiers, raman and advanced amplifiers, dispersion compensation modules, fiber-based components, DWDM multiplexers and demultiplexers, and pump laser products.
The photonics unit reported $1 billion in 2000 revenue, Corning says, but expects sales this year of $600 million to $700 million.
Finally, Corning will suspend dividend payments on its common stock, opting instead to reinvest the money in the company, it says. Its last quarterly dividend was payable June 29 at 6 cents a share. Dividends on the Series B 8 percent convertible stock will continue.