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Corning to Cut More Jobs, Capital Spending

April 24, 2002|BEN KLAYMAN | REUTERS

Corning Inc., the world's largest maker of fiber-optic cable, said Tuesday that its planned restructuring to return to profitability will include a further 12.5% reduction in its work force and lower capital spending.

Chief Financial Officer James Flaws said the company plans to cut up to 4,000 salaried workers from its 32,000-person work force. Corning cut 12,000 jobs last year, mostly hourly workers.

Flaws repeated that the firm's expected restructuring and impairment charges of about $600million in the second and third quarters will be about 40% cash.

Although fiber shipments are rising again quarter to quarter, the pricing environment remains brutal, analysts said.

"Our concerns continue to revolve around pricing pressures in the fiber business that can eat at sales growth and profitability even as units improve off of the incredible lows in" the fourth quarter, said Merrill Lynch analyst Steven Fox.

Corning's stock dipped nearly 3% on Tuesday, closing at $6.80 after falling 20 cents on the New York Stock Exchange.

The company, based in Corning, N.Y., late Monday posted a first-quarter loss of $90 million, or 10 cents a share, on sales of $898 million. It also said second-quarter revenue would be up slightly--but still short of expectations--and repeated it remains committed to return to profitability in 2003.

"Given that our revenues are basically flattening here and having achieved bottom, we don't expect to see big changes in our production worker group, but we do expect to see significant reductions of salaried people at all levels," Flaws told analysts on a conference call Tuesday. Most of the latest restructuring will occur in money-losing telecom units, which make up about 70% of revenue.

A Corning official said the firm would try to avoid closing plants.

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