Corning discontinues products, fires staff

The fallout in fiber deployments hit Corning hard in the third quarter, leading the company to confirm today its previously announced plans to lay off 4,000 employees, shut down manufacturing facilities and discontinue whole product lines.

Corning will close its photonics products manufacturing plant in Henrietta, N.Y., and has proposed closing its optical fiber facility in Deesdale, North Wales. Corning has stopped all expansion in the telecom space, and plans to exit other industries entirely.

Next year, it will shut down all manufacturing of glass tubing and lighting for televisions and is halting its microarray technology research in its life-sciences division. The staff laid off now total 12,000, and Corning also announced plans to temporarily idle global optical fiber operations through the end of the year.

While revenues are down and risks are up in all divisions, CEO John Loose said the economic effects are most pronounced in its telecommunication segments.

“Conditions changed so abruptly and with such severity that the impact on our business is unprecedented,” Loose said during an analyst call.

Corning posted third-quarter sales of $1.5 billion, down 21% from the $1.9 billion recorded in last year’s third quarter. It reported a net loss almost as great as the income it posted the 2000. For the third quarter, Corning recorded a $220 million loss, down 187% from last year’s third quarter, when it posted a net income of $254 million. Corning also will record a pre-tax charge of $339 million as part of a $1 billion year-long restructuring program.

Corning said it expects fiber volume in the fourth quarter to be less than half of what it was last year, and the company expects to experience extreme pricing pressure for the product it sells.

In 2002, the company will cut capital spending by almost two-thirds, and all expansion in the telecommunications market will be halted until economic conditions improve. The company expects $1 billion in sales during the fourth quarter and losses in the $200 million range.