Plantronics Shares Rallying On Job Cuts, Plant Closing

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; [e-mail]