ADC Telecommunications fell US$1.50 to $9.06 inmorning trading Wednesday after lowering its expectations for second-quarterresults and announcing plans to cut 3,000 to 4,000 workers.
ADC, a Minneapolis, Minnesota-based provider of fiber optics, networkequipment and software to broadband networks, said an “extremely challengingeconomic environment and a further slowdown in capital spending bycommunications service providers” will mean sales for the second quarterending April 30th will total $650 million to $700 million, down from $771million in the second quarter of last year.
As a result, the company expects a loss of 10 to 15 cents per share beforeextraordinary items, compared with income of 10 cents in the year-earlierquarter.
“The rapid downturn of telecommunications capital spending is clearly havinga greater than anticipated impact on ADC’s revenue and profits this year,”said chairman and chief executive officer Richard R. Roscitt.
Nevertheless,he said, “we are pleased to be maintaining, and in some cases increasing,market share across many of our product lines worldwide.”
The jobs being cut are in addition to some 3,000 jobs eliminated earlier in the fiscal year. The company said it will alsoeliminate most outside contract and temporary employees, consolidatefacilities and cut discretionary spending.
The moves will resultin charges, though the amounts have not yet been determined, ADC said.
The “new ADC,” said Roscitt, will concentrate on optics, digital subscriberline (DSL), Internet cable and software.
“We will continue to support andfocus on strong core areas such as fiber and copper connectivity and systemsintegration services,” he said.
ADC said it will release projections for the remainder of the year in lateMay, when it reports second-quarter results. The company said it expects proforma results to turn positive in the second half.