ECD Ovonics reorganizes with layoffs and closures

Energy Conversion Devices (NASDAQ: ENER) waited until late in the day yesterday to announce a restructuring that will involve headcount reductions, facility closings and asset disposals.

Fifty people lost their jobs yesterday, and another 25 reductions are expected imminently.

Executives said they intend to consolidate and realign the company's business activities around its profitable solar division, and reduce annual costs by approximately $23 million by the end of fiscal year 2008.

ECD's existing United Solar Ovonic segment (maker of its UNI-SOLAR products)—is already profitable, and is to assume the company's photovoltaic machine-building activities, which were previously part of another business segment.

A new Ovonic Materials business segment is being formed to subsume the company's previous battery business, along with hydrogen storage, fuel cell, photonic devices and other ativities. The combined activities are being "substantially reduced," the company said, and "balanced ... to realign commercialization efforts at sustainable levels."

“We are completing a transition from our historic research and development roots to become a competitive, commercial organization. Part of that transition requires us to bring our operating costs in line, which we will accomplish through this restructuring plan,”said James R. Metzger, Interim President and Chief Operating Officer.

On May 8th, the company said it expects it will report consolidated revenues of approximately $27 million for the third quarter, including revenues of approximately $24 million for United Solar Ovonic. If so, it will miss analysts' expectations by approximately 10%.

The company expects it will incur restructuring and other related charges in the fourth quarter of the current fiscal year of $3 – 6 million, with additional charges in fiscal year 2008.

In early March, company founder Stan Ovshinsky moved out of his operational roles (see Stan Ovshinsky passes the baton at ECD Ovonics.)

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