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For generations, young Irish couples have expected one thing as a wedding present: a set of Waterford Crystal glasses. They knew that the thick, elegant tableware would be around long enough to pass on to their children, and assumed that the iconic Irish firm, which was founded in 1783, would always be around, too. That's not so clear today. The glassmaker's parent company, Waterford Wedgwood, is in the midst of a financial crisis.

In March, it issued its fifth profit warning in two years, and announced that sales were down by 6%; analysts expect the €49.3 million loss it recorded last year to increase when it reports results in June. Last week, the firm slashed its total work force by 1,800 jobs, nearly 20%, and said it will close one of the two flagship factories in its home county, Waterford. Its stock has plummeted to just €0.05 on the Dublin market and is at risk of being delisted from the nasdaq exchange in the U.S.

Why is one of the world's most prestigious crystalmakers showing cracks? It's been quite a tumble for Waterford, which as recently as five years ago was thriving. But in late 2001, sales began to decline, partly as a result of 9/11 (tourist travel was down, and vacationers are the most reliable big spenders) and partly because the company didn't update its designs to match modern consumer tastes. Now, says chief executive, Redmond O'Donoghue, the firm is being hammered by the weak dollar. He claims that unfavorable exchange rates have cost the company €50 million in profits over the last two years. In terms of cost cutting, "we always got what we said we would get," O'Donoghue says. "But the goalposts always moved when the dollar shifted."

The firm, however, has been doing some goalpost shifting of its own. For starters, the parent company has been adding and shedding a dizzying number of businesses. Waterford merged with Wedgwood, the equally esteemed English pottery maker, in 1986, and then in 1999 added All-Clad cookware, which it sold last year. At the same time it took over Royal Doulton, an ailing British chinaware firm, for €59 million. Such shuffles confused investors, and the firm lost two chief financial officers between April 2004 and March 2005. "For 20 years, it's been a roller coaster," says O'Donoghue, who's been on the board since 1985. Waterford has tried to reach hipper markets.

"There's a huge problem with selling $50 and $60 glasses," says Bríd White, an analyst with Merrion Capital. "It's a generational shift. People don't buy for a lifetime anymore." So beginning in 1997, O'Donoghue recruited designers like Vera Wang, who lent her name to a popular line of Wedgwood chinaware, and started distributing in U.S. retailers such as Bed Bath & Beyond and Linens 'n' Things.

The best-selling designer products are now credited with keeping the company afloat. But Waterford doesn't want to go too far. "You won't see our core product in places like Costco," O'Donoghue says, referring to the U.S. discount store. And he is adamant that Waterford cannot abandon the company's promise never to discontinue a line of stemware, so broken glasses can always be replaced. Such sentiments may appeal to some traditionalists, but analysts remain concerned that the company lacks agility. While some rivals shift manufacturing to Asia, Waterford Wedgwood claims it has invested too much — €325 million — in its European plants to consider outsourcing. O'Donoghue says 70% of Waterford Crystal is still made in Ireland, where labor costs are relatively high.

And that's where cuts need to be made. Last week's layoffs will cost the company €90 million; to foot the bill, Waterford leaned on its chairman — the Irish billionaire Sir Anthony O'Reilly — who will underwrite an offering of 1.7 billion new shares with his brother-in-law, deputy chairman Peter Goulandris. But the new shares are priced at €0.06, 20% above current value; if existing shareholders don't bite, the men will be left with a majority stake. At that point, the company may as well enact a management buyout; it would get Waterford Wedgwood away from the quarterly pressure on financial results and could allow it to refocus on its core business.

"It's hard to argue that there's a huge rationale for a public listing for a small luxury-goods manufacturer," says Stuart Draper, head of research at Dolmen Stockbrokers. O'Reilly, who led a bid to take an Irish telecoms firm private, has so far repudiated suggestions that he might repeat it with the crystal and china maker. But if such a move can keep Water-ford from shattering altogether, a lot of Irish couples, at least, will be pleased.

• BRIAN LAVERY | Dublin
• WEB EXCLUSIVE: Waterford is losing money and laying off workers. Can the luxury crystalmaker keep itself together?