ADC to cut 3000-4000 jobs

(Telephony) Telecom equipment maker ADC Telecommunications said today it would cut between 3000 and 4000 jobs in response to projections of lower-than-expected sales and pro forma earnings per share for the second quarter and fiscal 2001.

The company joins other telecom companies hit hard by an economic downturn and capital-spending slowdown. The job reductions announcement follows the 3000 positions ADC already slashed this fiscal year.

“We are becoming even more conservative in our guidance, much more aggressive in our cost-reduction efforts, and more focused on profitable products and long-term growth potential,” said ADC chairman and CEO Richard Roscitt in a conference call.

Roscitt left his post as president of AT&T Business Services in January to succeed former ADC chairman and CEO William Cadogan.

A spokesman for the company said layoffs will begin this week and likely will be completed by the end of the company’s second quarter on April 30. Though he would not disclose which positions are being targeted, the spokesman said some jobs are safer that others.

“There are folks, predominantly in manufacturing and headquarters staff, that will be affected,” the spokesman said. “Other areas, such as sales, customer support, and research and development, will likely not see cuts.”

The Minnetonka, Minn.-based ADC said it now expects to post $650 million to $700 million in sales for the second quarter, compared to $771 million in sales for the same period last year.

A pro forma diluted loss per share of 10 cents to 15 cents is expected, compared to second quarter 2000, when the company posted pro forma diluted earnings of 10 cents per share.

Last month, ADC set its guidance for the second quarter 2001 at earnings per share of 9 cents to 10 cents on sales of about $825 million to $870 million. According to Thompson Financial/First Call, analysts pegged the company to show a profit of 9 cents per share.

In addition to slashing its work force, the company said it will consolidate facilities and cut discretionary costs company-wide. An ADC spokesman would not comment on facility consolidation plans but said closings are imminent.

“At this point, we’re not giving any details, but suffice it to say, we will be doing that,” he said.

ADC said it would not provide sales and earnings projections for fiscal 2001 until it releases second-quarter earnings in the second half of May. However, the company expects positive pro forma earnings per share for the second half of the fiscal year, a spokesman said.

In a report yesterday, Lawrence Harris at Josephthal & Co. lowered ADC’s diluted EPS estimate for fiscal 2001 from 50 cents to 45 cents and from 60 cents to 55 cents for fiscal 2002.

Harris cited an earnings warning by Vyyo, updated guidance from JDS Uniphase, Corning and New Focus and a reduced rollout of competitive local service by SBC as negatively impacting ADC.