Newport Corp. to cut 10% of staff

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Newport Corp. to cut 10% of staff Technology: Orders drop, but the maker of fiber-optic equipment will still meet sales targets.

July 10, 2001

By CHRIS FARNSWORTH The Orange County Register

IRVINE Newport Corp. plans to lay off about 10 percent of its work force - between 180 and 200 people - as its major customers cancel orders amid a continuing slump in spending on tech equipment.

The company, which makes equipment for the manufacture and testing of fiber optics, said orders in the second quarter were down almost $37 million, including about $13 million in cancellations.

Newport's announcement came on the heels of news Monday that Corning Inc., one of the largest fiber-optic manufacturers and one of its biggest customers, would miss sales estimates, close three plants and cut 1,000 jobs. Corning added it will take a $5.1 billion charge before taxes.

Other Newport customers, such as Lucent and Nortel, also have fallen short of sales estimates.

"If you've been following those companies, you know what problems they've been having," said Chief Financial Officer Chuck Cargile. "Once we had seen the full impact of what our customers were doing, we decided to take the action now, to make the transition as easy as we could."

About half the job cuts will be from the manufacturing and support areas of the Irvine and Garden Grove facilities, Cargile said. The layoffs include 40 temporary employees who were let go two weeks ago.

The company expects annual savings of $5 million to $7 million from the cuts.

Newport, which had 1,744 employees before the cuts, said it would have sales of about $95 million to $100 million and profits of about 32 cents per share in the second quarter - in line with the expectations of Wall Street analysts, but down from sales of $106.7 million in the first quarter.

Newport said it should have sales of $350 million to $360 million for the year, within previous estimates.

Newport will take a charge in the third quarter of about $1 million to $1.5 million for employee severance. It also will take a charge of between $6 million and $10 million to reduce some of its inventory.

Newport's stock climbed 37 cents to close at $24.05.

-- PHO (owennos@bigfoot.com), July 10, 2001


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