Copper Mountain cuts 42% of work force, abandons product lines

Copper Mountain announced today it will fire 142 employees and close down facilities as part of a restructuring plan that company officials claim will refocus the DSL equipment vendor on more profitable product lines and guide it through the current tepid spending period.

Copper Mountain coupled the restructuring announcement with its second-quarter earnings, reporting a pro forma net loss of $9.1 million, or 17 cents a share. Last year, Copper Mountain reported profits of $14.2 million, or 28 cents a share, for the same period.

“This quarter’s performance reflects an economic environment that is largely unchanged from last quarter,” said CEO and president Rick Gilbert. “Most telecom providers, including our primary customers, continue to restrict spending on new capital equipment. It is difficult to predict how long this climate will prevail. Therefore, we have taken steps to save cash.”

Those steps specifically are a 42% reduction in the vendor’s work force and the closure of its Fremont, Calif., offices. Copper Mountain will also shut down its customer-premises-equipment and multitenant-unit product lines to focus on more profitable divisions.

“Our goal is to structure the company so it is an appropriate size for the current economy without affecting product development, sales and support organizations that target the large-scale customers,” Gilbert said. “The most important result of this restructuring is that we believe it yields an operating plan for Copper Mountain that is fully funded until 2003, with realistic opportunities for revenue growth and without the need to raise capital.”

Copper Mountain said it expects to record a one time charge of $15 million to $18 million for the restructuring.