Hard-Hit Antec Cuts Another 400 Workers11/01/2008 8:00 PM Eastern
Antec Corp. last week said it would lay off about 400 workers as part of an ongoing effort to reduce costs.
The cuts mark the telecommunications equipment maker's second round of layoffs this year. In February, Antec said it would jettison 800 workers.
The workforce reductions would occur in its locations in Duluth, Ga. and Englewood, Colo., as well as in factories in El Paso, Texas and Juarez, Mexico, Antec said in a statement.
Antec, whose product line includes cable-telephony equipment, has been hit hard by the downturn in orders from MSOs and the overall malaise in the telecom sector. For the fourth quarter, sales fell by 28 percent and the company's net loss more than doubled to $6.2 million.
The reductions cover direct labor-force positions at its manufacturing facilities — about 160 of the layoffs will come at its Juarez plant — as well as management and support positions throughout the company, Antec said in a statement. After the downsizing is complete, Antec will have about 2,000 employees.
"We are taking these actions today in order to better match our ongoing operating expense levels with the realities of the market conditions that our company and our industry in general are experiencing," Antec president and CEO Robert Stanzione said in a prepared statement.
Antec said it would take a $5 million pre-tax charge in the second quarter for severance and other costs related to the layoffs. The cuts would save Antec about $10 million, the company said.
Antec said further details would be disclosed when it reports first-quarter earnings after the market close on April 25.
Antec stock fared fairly well despite the bad news. It was up 7 cents on April 10 to $6.21 per share and closed at $6.63 each (up 42 cents) on April 11. But Josephthal & Co. cable equipment analyst Lawrence Harris said that was due more to the general upturn in the stock market than specific investor confidence in Antec.
Harris said Antec shares are trading at around their tangible book value, which is book value minus intangible assets. At that level, Antec stock has nowhere to go but up.
"It has pretty much based out," Harris said. "The question is where is the catalyst for it to move higher? Barring some larger than expected loss, I don't think it will move down significantly from current levels."
Harris said the impetus that most investors are seeking is a resurgence in cable-equipment orders, which he doesn't expect to come until after the first half of the year.
Cable operators, notably AT&T Corp. and Cox Communications Inc., have held back on their purchases of cable telephony equipment in favor of spending on products that have a proven revenue stream, like digital set-top boxes. While that bodes well for companies like Motorola Inc. and Scientific-Atlanta Inc., it's not good news for equipment suppliers like Antec.
In the fourth quarter ended Dec. 31, the most recent available, Antec said that about 30 percent of its revenue ($54.2 million) was derived from sales of telephony and Internet products. Optical and broadband transmission equipment accounted for $39.1 million in sales, while outside plant equipment brought in $51.7 million.
"They [Antec] are not only affected by AT&T and Cox, but they are also affected by outside plant and construction slowdowns," Harris said.