ANTEC lays off 400 as Nortel takes stake in company

(Telephony) ANTEC today said it would cut 400 jobs, or about 17% of its work force, as it tries to right a ship knocked off course by AT&T's equipment order shutdown late last year.

"Overall, business conditions got a little bit difficult in the fourth quarter," said ANTEC spokesman Jim Bauer. "We tried to reduce our operating expenses for the last six months"--with strategies such as layoffs, four-day weeks at some factories, unfilled job openings, and reduced travel and advertising--but "the reality is we had to do more, and what you saw today is the result."

The layoffs will be spread across ANTEC corporate sites in Duluth, Ga., and Englewood, Colo., and manufacturing facilities in El Paso, Texas, and Juarez, Mexico.

Bauer said the layoffs were coincidental to the fact that Nortel will now take a 49.3% stake in ANTEC as the company evolves into a new company called Arris.

Originally, Arris was an ANTEC-Nortel joint venture of which Nortel controlled 81%. Last October, ANTEC said it would buy out Nortel's stake for $325 million and 33 million shares of stock and morph into a new company called Arris. That move hit the AT&T bump in December and didn't happen.

"We've been talking about this since Dec. 15," said Bauer. "After many months ... we came up with a markedly different deal."

Now, Nortel gets no cash from ANTEC but will control 37 million shares of stock. Nortel still holds two seats on the ANTEC board but its share of Arris will now be 49.3% when the deal closes some time in this quarter.

"They're going to be a vital partner, because, obviously, when we sell telephony to the cable companies, they have a good opportunity to sell Nortel switches," Bauer said. "When they sell equipment to their [telephony] people, we have opportunities to sell ANTEC equipment."

Bauer estimated that 50% of Arris' business would be cable telephony and Internet access products.

"What it really does is allows us to pursue the local loop and it allows them to pursue up the network. It makes a lot of business sense," he said.