Is Corning Seeing the Light at the End of the Tunnel?
Emulex Raises Cash for Possible Acquisitions; Former Fujitsu Phone Gear Unit Gets New Name,
TECHNOLOGY
by Andrew Simons
You know networking only can get better when Corning Inc. says its business finally may be hitting bottom.
The Corning, N.Y.-based company, which has a facility in Fountain Valley, is perhaps the only supplier to be hit harder than Cisco Systems Inc. by the telecommunications slowdown. The beleaguered maker of fiber-optic cable and network components has watched its business decline since late 2000.
Corning’s troubles culminated in the company taking a $5.1 billion charge last July as it wrote off unsold inventory and brought its layoff tally to 3,500 people.
Now the tone has changed. Where Corning officials used to shrug their shoulders, they recently told analysts they hope for a recovery in the second half of this year. But the company remains equivocal.
“Do we think we’re at bottom? You know, we’re not quite sure,” Corning President John Loose told Reuters. “We think we’re bouncing along the bottom. We are not ready to declare it. Since last fall we have consistently said we may begin to see signs of a recovery in the second half of this year, but the fact remains that no one really knows.”
Still, even cautious optimism should be good news for Corning workers at the company’s new facility in Fountain Valley. Last November, as Corning was putting the finishing touches on its new complex, the company laid off a quarter of its staff. In all, 75 Corning workers in Orange County lost their jobs, bringing the company’s local roster to about 220.
The layoffs were part of wider cost cutting in Corning’s networking components business, which has other facilities in Rochester, N.Y., and Boston. OC was hit hard in the company’s first round of cuts, while other locations were hit worse in the second. Both took place during last summer.
Corning’s hopes provide ammunition for technology bulls, who have sounded more optimistic about a comeback in the tech sector and the stocks of companies in it. The restructuring among telecom companies in the past year has been enough to reset expectations, according to some.
“The kind of bloodletting that we’ve seen is more than sufficient to get the carriers back on track in terms of their cash flow,” Sanford Bernstein & Co. analyst Paul Sagawa said late last year.
Emulex’s Influx
In a bid to fill its war chest for the coming year, storage components maker Emulex Corp. recently sold $300 million in convertible debentures in a private placement deal.
The company said the cash raised in the sale would be used for general purposes and possible acquisitions, though the company hasn’t commented on any specific deals.
Some observers had expected Emulex to acquire companies last year after December 2000’s buy of Concord, Mass.-based Giganet Inc. for $645 million. But an acquisition push didn’t materialize.
Before the bond sale, Emulex had more than doubled its cash in the past year. As of December 2000, the company counted $14 million. Last month, Emulex was up to $51 million.
In the December quarter, Emulex made $10.7 million on $62 million in sales, compared to $18.1 million on $71 million in sales in the year-ago period.
“Although we had expected some seasonal sequential improvement to occur in the second quarter, revenue growth exceeded our expectations,” said Emulex Chief Executive Paul Folino. “This was the first quarter in which our revenues grew sequentially since the technology spending slowdown began in early 2001.”
Former Fujitsu Arm Now Altura
A month after Los Angeles-based Platinum Equity LLC bought Irvine-based Fujitsu Business Communication Systems Inc. from Japan’s Fujitsu Ltd., the phone gear company has a new name: Altura Communication Solutions LLC.
Robert Blazek, longtime Fujitsu Business Communications executive, also has been named Altura’s new chief executive.
“Bob has a deep understanding of Altura and its customers gained from his experience in the company’s core business,” said Ivan Ivankovich, vice president of Altura’s portfolio operations. “His knowledge and accomplishments make him the right person to lead Altura as an independent sales and service organization and to develop the company’s future strategy.”
Altura is looking to improve its network of communications gear suppliers, officials said. The company sells products including phone switching systems, messaging systems, contact centers, voice conferencing systems, network and system management tools and broadband data communications products.
Fujitsu had sought to close down what’s now Altura as part of a global restructuring.
Conexant Lands Deals
Conexant Systems Inc. won a contract with telecommunication companies Korea Telecom and Hanaro Telecom. The two companies,the two largest telecom providers in South Korea,will use Conexant’s ADSL modems,high speed modems used in existing phone lines,on their networks. Conexant didn’t reveal the value of the deal.
“These two leading service providers continue to install several types of equipment on their network and our ADSL technology is poised for even broader deployment in Korea,” said Chee Kwan Conexant’s vice president of broadband products for the personal computing division.
