StockerYale plans 14% workforce cut
Salem-based StockerYale plans to reduce its workforce by 14 percent as part of a realignment into three core businesses, the company announced Jan. 10.
It is unclear whether the reduction would be achieved through attrition or layoffs or whether it would affect the firm’s Salem headquarters, where 35 people work.
The company also is seeking to sell or exit its operations in Singapore, according to the release, so the cuts may come there. The company also has facilities in Montreal, Canada, and Cork in Ireland.
The changes should cost the company as much as $2 million in the fourth quarter of 2005. The company has been short of cash, but in the last month has sold off its Salem headquarters and a Canadian facility, arranging to lease them instead, Those moves enabled the company to pay off its short-term debt and still have approximately $4.8 million in cash, though increasing expenses in the process.
A realignment could mean the company will sell off or abandon its older and slower-growing product lines — fiberoptic illumination and galvanometers — to concentrate on its three core growth businesses: lasers, LEDs and specialty optical fiber.
Revenues from specialty optical fiber were up 170 percent at the end of fiscal 2005, compared to the last quarter of 2004, and laser sales were up 21 percent, while the older products’ growth was more sluggish, even though the older products represent more revenue.
“The company expects to build customer and shareholder value by more effectively allocating people and resources to our fastest growing product lines where we have a clear, differentiated value proposition. This strategy will allow the company to better respond to market opportunities for our products, and, most importantly, to improve our progress towards achieving profitability,” said Mark Blodgett, StockerYale’s chairman and CEO, in a statement.
The company has been struggling recently, losing a total of $2.6 million in the last two quarters.
In addition, the company faces a class action lawsuit over alleged insider trading and possible delisting from the Nasdaq stock exchange, because it has been unable to keep its stock price over a dollar since September.
The lawsuits filed in May, and consolidated in September in U.S. District Court in New Hampshire, charge executives at StockerYale manipulated or used insider information about a lucrative defense deal, allowing Blodgett and his father, board member Lawrence Blodgett, to sell off the stock at inflated prices. The lawsuits were filed shortly after the company’s $900,000 settlement with the Securities and Exchange Commission concerning similar allegations.