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Reuters Technology Report
JDS Denies Ottawa Office to Close in Cost-Cutting
By Susan Taylor
OTTAWA (Reuters) - JDS Uniphase Corp. (Toronto:JDU.TO - News; NasdaqNM:JDSU - News) denied speculation on Tuesday that it plans to close the doors on its
Ottawa headquarters, but the world's largest supplier of fiber-optic components said it has shuttered a New Jersey facility as part of a global cost-cutting plan.
Rumors about the fate of Ottawa operations follow an analyst's report that suggests JDS will chop Ottawa
staffing from more than 2,000 to less than 1,000 and move that production to China.
The report, from Yorkton Securities analyst Chris Umiastowski, also suggested JDS would close its New Jersey
unit, which produces amplifiers, and consolidate that operation with its San Jose, California, headquarters.
JDS, which is struggling amid a sharp decline in demand as phone companies keep spending plans on hold, said on
Tuesday that it told staff two weeks ago that it would close one of its three New Jersey plants.
"There is plenty of speculation surrounding the latest restructuring actions at JDS Uniphase. Some go so far as to
suggest that JDS plans to close up shop in Ottawa," said Umiastowski in his report.
"We fully believe this is false; however, we are confident that the company has again increased the scope of its
global realignment plan."
The report, which reduced the stock target price to $3.50 from $5, also notes that pricing pressure continues to
worsen in the optical component sector.
In April, JDS reported a net loss of $4.3 billion and said it would cut about 2,000 more jobs, or 20 percent of its 10,000 employees world wide, and close sites.
"There are no plans to close the Ottawa site," said JDS spokeswoman Lori Goulet, adding the company has not announced that it will cut Ottawa staff to less than 1,000
employees.
"We've said 2,000 globally and we haven't provided that breakdown," she said. "We're still in the planning process so we're still trying to figure out when and where."
Ottawa has 2,400 staff, down from its peak of more than 10,000 in January 2001.
"It's a fairly common rumor," said an Ottawa JDS employee, who asked not to be named, adding that speculation over job cuts does not suggest the head count will be
halved.
Global cost-cutting efforts are expected to see 17 facilities close and save $1.1 billion in annual costs, a recent Salomon Smith Barney research note said. JDS continues
to move manufacturing to China, the note added.
JDS currently has 1,600 staff in China, the company said.
Yorkton's Umiastowski said the Ottawa staff cuts would leave JDS with a one-million-square-foot facility it does not need, adding that he believes the company has
been actively looking for a tenant to take over the bulk of the building.
"This is consistent with JDS's stated plan to keep Ottawa as an R&D center," Umiastowski said in the report. "We believe R&D will work closely with new product
pilot lines to ensure a smooth transition of (future) production to China."
Goulet said she was unaware of any leasing efforts.
Shares in JDS added nearly 6 percent, or 18 cents, to close at $3.34 on Nasdaq and edged up 2 percent, or 12 Canadian cents to end at C$5.70 on the Toronto Stock
Exchange.
($1=$1.53 Canadian)
JDS Denies Ottawa Office to Close in Cost-Cutting
By Susan Taylor
OTTAWA (Reuters) - JDS Uniphase Corp. (Toronto:JDU.TO - News; NasdaqNM:JDSU - News) denied speculation on Tuesday that it plans to close the doors on its
Ottawa headquarters, but the world's largest supplier of fiber-optic components said it has shuttered a New Jersey facility as part of a global cost-cutting plan.
Rumors about the fate of Ottawa operations follow an analyst's report that suggests JDS will chop Ottawa
staffing from more than 2,000 to less than 1,000 and move that production to China.
The report, from Yorkton Securities analyst Chris Umiastowski, also suggested JDS would close its New Jersey
unit, which produces amplifiers, and consolidate that operation with its San Jose, California, headquarters.
JDS, which is struggling amid a sharp decline in demand as phone companies keep spending plans on hold, said on
Tuesday that it told staff two weeks ago that it would close one of its three New Jersey plants.
"There is plenty of speculation surrounding the latest restructuring actions at JDS Uniphase. Some go so far as to
suggest that JDS plans to close up shop in Ottawa," said Umiastowski in his report.
"We fully believe this is false; however, we are confident that the company has again increased the scope of its
global realignment plan."
The report, which reduced the stock target price to $3.50 from $5, also notes that pricing pressure continues to
worsen in the optical component sector.
In April, JDS reported a net loss of $4.3 billion and said it would cut about 2,000 more jobs, or 20 percent of its 10,000 employees world wide, and close sites.
"There are no plans to close the Ottawa site," said JDS spokeswoman Lori Goulet, adding the company has not announced that it will cut Ottawa staff to less than 1,000
employees.
"We've said 2,000 globally and we haven't provided that breakdown," she said. "We're still in the planning process so we're still trying to figure out when and where."
Ottawa has 2,400 staff, down from its peak of more than 10,000 in January 2001.
"It's a fairly common rumor," said an Ottawa JDS employee, who asked not to be named, adding that speculation over job cuts does not suggest the head count will be
halved.
Global cost-cutting efforts are expected to see 17 facilities close and save $1.1 billion in annual costs, a recent Salomon Smith Barney research note said. JDS continues
to move manufacturing to China, the note added.
JDS currently has 1,600 staff in China, the company said.
Yorkton's Umiastowski said the Ottawa staff cuts would leave JDS with a one-million-square-foot facility it does not need, adding that he believes the company has
been actively looking for a tenant to take over the bulk of the building.
"This is consistent with JDS's stated plan to keep Ottawa as an R&D center," Umiastowski said in the report. "We believe R&D will work closely with new product
pilot lines to ensure a smooth transition of (future) production to China."
Goulet said she was unaware of any leasing efforts.
Shares in JDS added nearly 6 percent, or 18 cents, to close at $3.34 on Nasdaq and edged up 2 percent, or 12 Canadian cents to end at C$5.70 on the Toronto Stock
Exchange.
($1=$1.53 Canadian)
