14 January 2003 -- On 9 January at the fifth annual Needham Growth Conference in New York City, James B Flaws, vice chairman and chief financial officer of the world's biggest fibre-optic cable maker Corning Inc, told financial analysts that, as a part of Corning's plan to restore profitability in 2003, the company will continue to reduce the fixed-cost structure in its optical fibre and cable businesses, narrow its product scope in photonics, and reduce corporate staff spending.
Corning may therefore need to implement further headcount reductions in 2003. In October Corning posted its sixth straight quarterly loss and warned of a weaker-than-expected Q4/2002.
Previously announced restructuring actions to reduce its fixed-cost structure include cutting its workforce by more than 20% to 23,500 through the closure of a fibre manufacturing facility in Australia; the proposed closure of a fibre plant in Germany; the mothballing of fibre operations in Concord, NC, USA; reductions of capacity at its cabling and hardware and equipment locations worldwide; and the permanent closure of its thin-filter manufacturing facility in Massachusetts. These actions are expected to result in more than USD400m in annual savings and a pre-tax restructuring charge of USD550-650m in Q4/2002.
A month Corning said it was taking non-cash impairment charges of USD800-825m pre-tax in Q4/2002, covering a USD400m impairment of goodwill in the telecoms segment and a USD400-425m impairment of assets related to its conventional television glass and photonics technologies businesses. Corning also said that it did not expect significant growth in the telecom business until late 2004. Telecom accounts for about half Corning's sales.
Flaws says that Corning is now considering a number of options for its photonics business, including the potential of partnerships, joint ventures or other possibilities. Corning will continue to invest in that business, but at a reduced level.
Though the telecoms industry remains depressed, Corning's fiber and cable businesses, "are currently cash-flow positive before restructuring charges, and despite the continued pricing pressure and low-volume growth expectations, we are working to restore these businesses to profitability."