Ocular Sciences, Shares Down On Warning, Planned Job Cuts

Shares of Ocular Sciences Inc. crashed on the news that the Concord-based maker of disposable contact lenses would report weaker-than-expected fourth-quarter sales. In the face of falling sales, the company said it will accelerate a planned upgrade to its manufacturing operations. The upgrade will spell job losses for 600 of the company's employees, about 19 percent of Ocular's total workforce.

In a statement issued, Ocular said lower-than-expected patient traffic was reported by customers during the past six weeks. The lower traffic has primarily affected the company's largest segments - the weekly and two-week disposable contact lens products lines, which carry the highest margins. The company also said sales of monthly disposable contact lens in the European markets are less than planned while the daily disposable product line is achieving internal sales forecasts.

Ocular now expects to earn 32 cents to 36 cents a share before costs for a previously announced reorganization, which includes cutting 600 jobs. Under the pressure of falling margins, Ocular will speed up its planned upgrade, investing a total of $40 million during a two-year implementation period that began this quarter. The spending includes capital equipment as well as severance costs for the Ocular employees that will lose their jobs as a result of the upgrade.

"Our Generation 2 manufacturing technology continues to perform as planned and is generating greater unit output with less labor, in less facility space and at lower total product cost," Ocular CEO Stephen Fanning said in the statement. "Since we began implementing Gen 2, manufacturing costs for daily disposables have been reduced 40 percent as compared to the older manufacturing technology.'