With Stock Plunging, ECI Expected to Dump 300 to 500 Jobs - TheStreet

With Stock Plunging, ECI Expected to Dump 300 to 500 Jobs

The moves comes as the telecom company prepares to split into five independent operating units.
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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

Koor Industries

(KOR)

, 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

Tadiran Communications

unit. They, however, have a union contract and laying them off requires the approval of the

Labor Ministry

.

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

Claridge

group and the

Tel Aviv Stock Exchange

-traded

Clal

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.

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