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14 October 2008


Avanex cutting 8% of workforce and closing Florida facility

In a report filed last week with the US Securities and Exchange Commission (SEC), optical communications component and module maker Avanex Corp of Fremont, CA, USA said that, in order to reduce costs, streamline operations, and improve its cost structure, by the end of October it will cut staffing worldwide by about 47 (8% of the workforce that it had at the end of June).

The cuts include closing the firm’s facility in Melbourne, FL, USA, which was acquired in July 2007 along with the MSA 300-pin transponder and XFP transceiver business of the Commercial Communication Products Division (CCPD) of Essex Corp (which is now a subsidiary of Northrop Grumman Corp).

The product lines, inventory and fixed assets will be transferred to Avanex’s facilities in either Shanghai, China (originally intended as a product development center, but now an interface for the Chinese design centers of customers including Alcatel-Lucent, which represented 25% of Avanex’s fiscal 2008 revenue) or Villebon Sur Yvette, France (where transponder and transceiver transmission products are made, including 40Gb/s tunable transponders), near Alcatel-Lucent’s European base.

Avanex’s revenues fell from $213m in fiscal 2007 to $208m in fiscal 2008 (which ended in June). For the September quarter, Avanex expects revenue to fall from $51.8m to $44-48m and gross margin to fall from 32% to 20-23%. July saw the departure of chief financial officer Marla Sanchez and CEO Jo Major (who was replaced by Giovanni Barbarossa).

As part of the cost cutting, all of Avanex’s executive officers have voluntarily agreed to a 10% cut in their salaries from October onwards.

See related items:

Avanex’s sales rebound, but profits fall during new-product ramp

Avanex stockholders authorize reverse stock split

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