Alcatel Optronics to consolidate to two plants; cut staffing from 1550 to under 500 by end-2003

18 September 2002 -- Alcatel Optronics says that "continuing recession and persistent inventories at the customers' level" could result in its Q3/2002 revenue declining up to 50% sequentially (to about EUR12m). Revenues in Q2/2001 had been almost EUR150m.

"We feel that it is mandatory to intensify restructuring actions and launch a Strategic Refocus Plan," said CEO Jean-Christophe Giroux. "We want to reach as soon as possible a streamlined business model, with our Nozay (France) manufacturing facility focusing on Active Components, our Livingston (Scotland) plant [the former Kymata headquarters] on Passives, and both units combining forces in a joint effort towards Hybrids.

From 1550 staff today, we expect to reach approximately 1000 before year-end, and ultimately below 500 by end-2003," he adds (Alcatel Optronics had previously said in March that it would cut its workforce by a quarter from 1805 to 1350 by end-2002). "This decrease in fixed costs should results in an estimated EUR40m quarterly sales break-even point by end-2003," he says.

The Strategic Refocus Plan includes the following:

-- In France, the Nozay site will be adjusted to about 300 staff, through outsourcing, pooling of resources with partners, spin-offs and individual redeployments.
Also, the conversion of the Lannion long-haul and submarine component manufacturing site to another industry segment (announced on 5 June) could be completed as early as Q3/2003.

-- In the US, the majority of the Alcatel Optronics Plano (Texas) optical board assembly business and assets should be sold to an industrial partner by end-2002.

-- In Canada, all Fiber Bragg Grating (FBG) activities will be discontinued and the R&D expertise transferred to Livingston.

-- At the Livingston site, all passive products (planar lightwave circuits and FBGs) will be consolidated.

* In July a management buy-out of Alcatel Optronics Netherlands (announced in June) created C2V, financially supported by Dutch private equity firm Greenfield Capital Partners. Its non-telecom MEMS and planar design software stem from two start-ups bought by Kymata prior to its acquisition by Alcatel Optronics. A C2V team is dedicated to Alcatel Optronics for 18 months on a planar design R&D program.