ECI Telecom (ECIL) will announce a plan this week to lay off at least 300 and as many as 500 employees, TheMarker.com has learned.
The cuts will come in all divisions as ECI reorganizes ahead of splitting into five operating companies and a holding company in a effort to release trapped value.
ECI, which is controlled by
, is based in New Jersey and employs 4,700 people around the world. Most work in the company's plants in Petah Tikva and Ofakim, a town that has come to symbolize the ravages of chronic unemployment in southern Israel.
Koor stock hit a 52-week low of $13.25 yesterday; ECI stock hit a 52-week low of $14.13.
About a month ago rumors circled that ECI, under the leadership of CEO Doron Inbar, intended to fire hundreds of workers, mainly from the former
unit. They, however, have a union contract and laying them off requires the approval of the
ECI's five independent companies will concentrate on wireless, relay, optic, sound compression and asymmetrical digital subscriber lines, or aDSL.
Koor took ECI over three years ago from the
group and the
Tel Aviv Stock Exchange
at $29 to $34 a share. ECI stock today is down to $15 and its market cap is down to $1.3 billion. Analysts put the combined value of ECI's five divisions at between $5 billion and $10 billion.
InnoWave ECI Wireless Systems
has already been incorporated as a separate entity. ECI hopes to bring it public this winter. Koor is looking for strategic partners for the other divisions.
ECI's spokesman said the company's management does not comment on rumors.
ECI recently announced that its fourth quarter performance would not meet expectations, due to lower than expected sales of traditional digital circuit multiplication, or DCM, equipment, and lower-than-expected growth in the optic products division. ECI will report a $15 million to $25 million operating loss for the fourth quarter on sales of no more than $330 million.
TheMarker is a leading source for technology and business news information in Israel. The site is a venture backed by the Israeli daily Ha'aretz and TheStreet.com. For more stories, go to