Adtech lays off 30 workers
By John Duchemin
Advertiser Staff Writer
Network test equipment maker Adtech Inc. yesterday laid off 30 employees, the first major reduction for the company after years of dramatic growth and another sign that the global tech slowdown has hurt Hawai'i companies.
The cuts, which represent about 10 percent of Adtech's Honolulu work force, leave the company with about 290 employees, and affect many of the company's divisions.
The layoffs are part of a national round of job cuts by Adtech parent company Spirent Communications, which wants to remove 10 percent of the employees in its entire network-testing division.
Spirent's network testing division includes Adtech, one of Hawai'i's most successful high-tech companies, and four sister companies. They represent the most profitable part of Spirent, but have been hit hard by the severe downturn in the telecommunications sector.
The layoffs come several weeks after the resignation of three top Spirent officials, including Adtech president Tareq Hoque, who had become increasingly at odds with Spirent's management style and argued against the layoff plan. Also resigning were Des Wilson, former president at Adtech sister company Hekimian in Rockville, Md., and Iain Milnes, who was president of Zarak Systems, another sister company based in Sunnyvale, Calif.
Alan Sguigna, Hoque's replacement at Adtech, said the layoffs were a "proactive" way to maintain profitability at the company. Adtech is making money, but with many of its key telecommunications customers struggling, the company had to cut back, Sguigna said in an interview yesterday afternoon.
"We saw some uncertainty, with a negative bias, for our outlook, and that dictated we should take action while we still could," Sguigna said.
Hoque, 35, who resigned July 11, said that the company has lost its long-term focus and that the layoffs and potential future cutbacks could damage Adtech's business prospects.
"Spirent needs to decide whether it's in the long-term interest of the company to manage costs like this in the short-term," Hoque said. "I fundamentally believe that telecommunications has outstanding opportunities in the long term, and any company that wants to maintain its leadership position needs to invest in its people and its products."
Sguigna said the goals of long-term dominance and short-term cost control are "not mutually exclusive."
"Dominating the communications market is consistent with managing costs," he said. "I suspect that most technology companies agree with me there."
Sguigna said the company sees no need for further layoffs, but acknowledged that further cost-cutting measures are possible.
Spirent is looking at many possibilities, he said, including combining some of Adtech's departments, such as product assembly and customer service, with those of other Spirent companies.
Adtech has been one of the biggest success stories of the Hawai'i technology sector. The company has grown during three decades from a tiny firm run by founder and UH professor Edward Weldon to one of the world leaders in network testing, with more than $150 million in annual revenues last year, a dominant share in its market and top-tier customers. Adtech designs equipment that can analyze the performance of the world's fastest communications networks.
Observers say Adtech proved that a technology company could start, grow, compete and thrive in Hawai'i. The company has won many industry awards for its products, which are conceived, developed, marketed and assembled by a largely Hawai'i-born work force.
When Spirent bought Adtech in 1997, the Honolulu company quickly grew to become one of its parent company's top revenue and profit generators. Adtech also maintained autonomy, with an assembly plant and corporate headquarters in Kaimuki.
The bottom fell out of the market this year, however, as many of Adtech's customers — including information technology superpowers Cisco, Lucent and Nortel — announced billions of dollars in losses, tens of thousands of layoffs and pullbacks from new investment.
Spirent's publicly traded stock has plummeted, and the company warned investors in June that revenues were down sharply in the division that includes Adtech.
Adtech is one of several Hawai'i technology and telecommunications companies to cut jobs in recent months. Sprint PCS Hawai'i recently announced the closing of its downtown Honolulu call center, displacing several dozen workers. Companies including HotU, WorldPoint, HighSpeed Communications and non-profit Ohana Foundation have also laid off employees.
Correction: Sprint PCS Hawai'i will close its downtown Honolulu call center. Sprint Hawai'i has a separate call center in Honolulu, which will remain open. A previous version of this story was unclear on which center was closing.
