UPDATE 1-Soapstone Networks cuts 40 pct of jobs

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Tue Apr 14, 2009 5:24pm EDT

* Expects $500,000 in severance, other costs in Q2

* Expects to save additional $3 mln in 2009

April 14 (Reuters) - Telecom equipment maker Soapstone Networks Inc SOAP.O said it is slashing about 40 percent of its workforce to cut expenses.

The company, which said in February it was exploring strategic alternatives, expects severance and related costs of about $500,000 in the second quarter.

Soapstone sees overall incremental savings of about $3.0 million during 2009 as a result of the job cuts, in addition to the $5.0 million in savings it expects from a workforce reduction it announced in February.

On Feb. 12, the company said it was cutting permanent headcount by about 10 percent and its contractor workforce by about 75 percent.

Shares of the company closed at $3.49 Tuesday on the Nasdaq. (Reporting by Mansi Dutta in Bangalore; Editing by Anne Pallivathuckal)

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