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Black Box lays off 105 more locally

Friday, July 13, 2001

By Stephanie Franken, Post-Gazette Staff Writer

Black Box Corp., the Lawrence, Washington County-based network services and equipment company, laid off 15 percent of its local work force and 2 percent of its worldwide staff on Wednesday.

Citing economic conditions, the company fired 105 of its 700 local employees, mainly among phone support and customer service workers. Another 100 were cut from various offices worldwide.

"We felt the reductions were necessary to get the cost structure in line with the revenue stream," said Anna Baird, the company's vice president and chief financial officer.

The staff reduction follows March cutbacks of 10 local workers and 140 worldwide.

The company tried other cost-cutting measures before resorting to layoffs. "This was really one of the last things we looked at," Baird said.

She declined to comment about employees' severance packages but said Black Box has a "stellar" program for assisting terminated workers.

She also would not comment on the circumstances that led to the layoffs, saying Black Box is in a quiet period prior to releasing its second-quarter earnings report. "Given the economic circumstances, however, we think our reductions are modest compared to other companies'."

From Wall Street's perspective, Black Box isn't facing as many troubles as many technology companies during the economic downturn. "Consensus estimates are looking for some pretty good growth of the company," said Robert Canters, a senior vice president at Legg Mason who tracks Black Box's performance.

The company sells computer networking services and equipment to businesses. Its Black Box Catalog sells more than 40,000 networking products, and its technical support staff give assistance over the telephone to customers in 132 countries. The company also sells custom networking services.

It was one of three local companies -- along with American Eagle Outfitters and Ansys -- to be named to Business Week's annual list of 100 "Hot Growth Companies" in May.

During the 2000 fiscal year, Black Box revenue grew 63 percent to $827 million from $508 million the previous year, while earnings totaled $77 million, or $3.86 a share -- a 39 percent rise from $55.3 million, or $2.94 a share, a year earlier.

Analysts' consensus estimates project earnings per share of $3.93 for 2001.

While it's possible Black Box will live up to those expectations, it's difficult to predict how it -- or any high-tech equipment company -- will fare in today's murky economic conditions, said Canters. He is optimistic about the company's long-term performance but is unsure it will reach its shorter-term earnings goals due to the heavy supply overhang for the products Black Box sells.

Black Box shares rose $1.39 to close yesterday at $62.65.



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