By Rex Crum
Shares of Plantronics Inc. surged as much as 20% Friday, one day
after the maker of Bluetooth equipment and headsets said it would
cut nearly 700 jobs and close a manufacturing facility in
China.
The shares climbed $1.64, or about 15%, to stand lately at
$12.36, pulling back from a session high of $12.93.
Late Thursday, the Santa Cruz, Calif.-based company (PLT)
announced it would shed 670 jobs, or about 17% of its work force,
and take charges of between $11 million and $13 million related to
the restructuring efforts.
In a statement, Chief Executive Ken Kannappan said that the
majority of the job cuts would be in China and that the company
would outsource the operations to GoerTek Inc. (002241.SZ), a
partner in building Bluetooth products for Plantronics. Analysts
who follow Plantronics painted the moves in an affirmative light,
with Morgan Keegan raised its rating on the stock to outperform
from market perform.
Meanwhile, Colby Synesael of Kaufman Bros. said that shutting
down the Suzhou plant would significantly reduce Plantronics'
operating costs.
However, "we remain cautious on the company's fundamental
outlook," Synesael said, noting that many of the company's products
are discretionary and that there is increasing competition and
commoditization in the wireless headset market. Rohit Chopra,
analyst with Wedbush Morgan Securities, said Plantronics' moves
could pay more financial benefits and called the restructuring "a
positive step in the right direction." Still, Chopra said the
company has issues facing its consumer-products division.
Accordingly, "we remain on the sidelines until the company is
able to articulate its plans" for that business, the analyst said.
Chopra has a hold rating on Plantronics.
By Rex Crum, 415-439-6400; AskNewswires@dowjones.com