Corning announces another 1000 job cuts

In an ominous note for the optical industry, leading fiber manufacturer Corning yesterday announced plans to lay off 1000 workers, citing a need to cut costs amid a rapid deterioration of orders for fiber-optic cable from North American incumbent local exchange carriers (ILECs).

In addition to the layoffs--bringing Corning’s headcount reduction for the year to 8,000--the fiber manufacturer said it will conduct short-term shutdowns at its manufacturing facilities in Wilmington and Concord, N.C.

While noting slower sales internationally, CEO John Loose said disappointments in the large North American market is driving Corning’s latest round of cost-cutting measures.

“We have acknowledged that North American long-haul is in tough strait and that the CLECs … are having a tough time,” Loose said. “So, if you work your way back, you recognize that the real issue here is around the incumbents.”

And the ILECs’ lack of demand for fiber for the rest of the year is a recent revelation, according to Loose, who noted that Corning’s fortunes tend to track those of the rest of the fiber industry.

“Up until three weeks ago, we thought we had a pretty good feel about what [the ILECs’] requirements were for the fourth quarter,” he said. “What we have learned in the last couple of weeks is that they are clearly changing their plans.”

Corning declined to give guidance for the third or fourth quarters but said it would not reach its previous guidance of 15% growth for the year. In fact, for the second half of this year, the company plans to ship less fiber than for the same time period last year.

Corning’s news was received negatively on Wall Street, where the company’s stock price fell more than 17% to close at $12.05 per share amid a flurry of downgrades from investment analysts and credit agencies.

In addition to reducing its work force by almost 20% this year, Corning has stopped giving dividends to stock holders.