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ADC bids farewell to optical components biz

Wed, 07/31/2002 - 8:00pm
Susan Rush

ADC has its eye on the prize: profitability. The telecom equipment maker is taking additional steps to cut costs, including getting out of the optical components business and refocusing its DSL access portfolio.

The company has hired Lehman Brothers to assist in the evaluation of its optical components business, and determine whether the unit should be sold or just shut down. A final decision concerning the optical components business, which encompasses ADC's line of passive and active optical components, will be made by Oct. 31, the end of ADC's fiscal 2002.

ADC also has decided to discontinue the development and marketing of its Avidia DSL Access Multiplexer product to focus on its iAN Broadband Access Gateway, a next-generation DSL access platform. While both products are designed to boost the ability of phone companies to offer high-speed access over copper wires, the iAN Broadband Access Gateway offers more advanced services such as Internet telephony.

The moves are designed to strengthen ADC's balance sheet, said Rick Roscitt, ADC's chairman and CEO.

During fiscal year 2002, ADC closed 41 facilities and cut 3,300 jobs. The company expects to consolidate and close additional facilities during the fourth quarter. At the end of the third-quarter, ADC had 9,200 employees, but warns further costs will be made this year.

ADC expects to take a one-time, yet-to-be-determined restructuring charge in the third quarter. On July 10, the company cut its third-quarter outlook. It expects to post a third-quarter loss of 5 cents to 7 cents a share and record revenue of $235 million to $245 million. In May, the company predicted revenue could be as high as $295 million. ADC is slated to release its third-quarter results after the market closes on Aug. 22.

As of 11:19 a.m. EDT, ADC shares were teetering near their 52-week low, down 11 cents, or 6 percent, to $1.69. The company's shares have fallen roughly 61 percent this year.

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