Posted on: Wednesday, June 13, 2001
Phone systems maker Avaya cuts work force
Associated Press
BASKING RIDGE, N.J. — Telephone systems maker Avaya Inc. is eliminating nearly 3,000 jobs, or 11 percent of its work force, as it accelerates restructuring because of slow sales.
Avaya, spun off by telecommunications giant Lucent Technologies in September, said late yesterday that because of slumping customer purchases in late May and early June, it expects revenues to decline by 4 percent to 6 percent for its third fiscal quarter, which ends June 30.
However, the company expects earnings per share to approximately double compared to last year's third fiscal quarter.
Avaya's announcement came after the markets closed. Shares of Avaya were down 12 cents to close at $15 on the New York Stock Exchange. In extended trading, shares fell another $1.15, or 7.6 percent, to $13.85.
The stock has fallen about 26 percent since it was spun off by Lucent in October 2000.
Avaya also said it expects revenue for its fourth quarter to decline by 4 percent to 8 percent, assuming the economy does not deteriorate further.
To cut costs, the company is speeding up its restructuring plan to complete it by the end of fiscal 2002, a year early. The company plans to consolidate and restructure underperforming parts of its business to boost profitability.
Avaya spokeswoman Lynn Newman said some of the 3,000 jobs eliminated will be through early retirement buyouts offered to U.S. managers.
With the new cuts, Avaya's work force will be reduced to about 25,000, compared with about 34,000 people in March 2000, when plans for the spinoff were first announced. Since then, the company has eliminated other jobs through steps including outsourcing the bulk of its production to contract manufacturer Celestica of Canada and allowing 1,900 service technicians to retire early. About three-fourths of those technicians still work for Avaya part time.
The earlier restructuring steps helped the company cut expenses $100 million per quarter.
Avaya is the worldwide leader in unified messaging, messaging systems, call centers and structured cabling systems. It is the U.S. leader in voice communications systems.
