Finisar, a provider of fiber optic subsystems and network test systems, has undertaken a number of cost reduction actions which are expected to result in total annual savings of approximately $40m as compared to the cost structure of the combined company for the full second fiscal quarter ended November 2, 2008.
A substantial portion of these cost savings, representing approximately $28m on an annual basis, will begin to benefit the company in the upcoming fourth quarter ending April 30, 2009, with an additional $12m in annual cost savings expected to benefit the Company by the second quarter ending October 31, 2009.
According to Finisar, the actions undertaken that should have a near term benefit include: personnel reductions of approximately 200 people, or 17% of the total workforce, excluding operations in Malaysia and Shanghai; reduction in salaries totaling 10% for officers, directors and most employees effective immediately; and elimination of 401(k) matching company contributions.
Other cost reduction actions that are expected to benefit the company beginning in the first quarter ending July 31, 2009 include: the transfer of certain product manufacturing to the company’s lower cost off-shore locations and cost savings from engineering changes to enable the broader use of internally manufactured components.
The company said that its revenues for the third fiscal quarter ended February 1, 2009 will be approximately $137m, down approximately $22m, or 14% from $159.5m in the second quarter of fiscal 2009. For the third quarter of fiscal 2009, revenues are still expected to show an increase of approximately $25m, or 22% over the third quarter of fiscal 2008.
Eitan Gertel, CEO of Finisar, said: With the cost reductions we have identified, we believe our non-GAAP EBITDA can continue to remain healthy even at reduced revenue levels. We believe the actions we have undertaken recently to reduce costs will not significantly impact our product design activities, which should position us well for the future.
