Alcatel posts $2.8 billion loss, announces 10,000 more job cuts

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July 26, 2001

Alcatel posts $2.8 billion loss, announces 10,000 more job cuts

PARIS (AP) -- French telecommunications equipment maker Alcatel posted a massive $2.8 billion loss for the second quarter and said it plans to cut its work force by another 10,200 jobs this year.

The job cuts announced Thursday, combined with previously disclosed reductions in the United States, Great Britain and Canada, mean Alcatel is shedding 16,000 jobs, or 14.5 percent of its work force of 110,000. The company said it has already carried out about 60 percent of the cuts.

Alcatel's loss of 3.12 billion euros for the April-June period was in contrast to a profit of 344 million euros a year ago. Revenue fell 11.9 percent.

The loss stemmed largely from a one-time charge of 3 billion euros ($2.63 billion) to pay for costs related to the restructuring.

Alcatel and many of its competitors have suffered as demand for telecommunications equipment has dried up. Rivals such as Canada's Nortel and U.S.-based Lucent Technologies have also announced broad job cuts.

Chief Executive Officer Serge Tchuruk, said in a statement the company was facing an industry downturn ``that is leaving no participant unscathed.''

The job cuts will be accomplished through layoffs, early retirement and transfer of positions to other companies. Alcatel said it has found replacement jobs for some 2,000 people whose positions were eliminated.

Company spokesman Klaus Wustrack said Alcatel will also stop doing business with some ``third-party contractors'' -- such as temporary service firms -- that employ an additional 4,000 people who work at Alcatel but are not counted as part of its work force.

Alcatel had said earlier this year that it would cut 5,000 jobs in the United States and 300 in Great Britain. The company announced late Wednesday it would cut 500 jobs in Canada.

Among the job cuts that had not yet been detailed, Alcatel said 4,000 will take place in Europe, the Middle East and Africa; 3,000 in the Americas outside of the United States and 1,000 in Asia.

In the earnings statement, Alcatel said revenue fell to 6.77 billion euros ($5.95 billion), from 7.69 euros billion in the second quarter of 2000.

But excluding the contribution last year of its former Nexans cable unit, revenue rose 4.5 percent from 6.48 billion euros ($5.70 billion). Nexans was recently listed as a separate company.

Operating profit -- which strips out one-time costs -- was higher than analysts expected, at 136 million euros ($120 million), but sharply lower than 638 million euros posted a year ago.

Alcatel cited losses in its mobile phone business, while profits from its traditional land-based phone equipment declined from last year's levels.

Tough times are likely to continue, Tchuruk said, citing a weakened U.S. market. He said revenues were likely to fall in the third quarter of 2001 compared to levels a year earlier.

Tchuruk said he expected the telecom equipment sector to recover ``in the course of 2002.''

In trading in Paris, Alcatel shares rose 4.7 percent on Thursday.

Also Thursday, Chief Operating Officer Krish Prabhu, who ran Alcatel's U.S. operations, said he would resign on Aug. 31, citing personal reasons. Prabhu said he would join the company's board. Prabhu was considered a top candidate to succeed Tchuruk.

Earlier this year, Alcatel led a failed attempt to buy Lucent but talks fell apart because of disputes over who would control the company.

Last month, Alcatel said it plans to sell most of its manufacturing plants worldwide by the end of 2002.

http://www.siliconvalley.com/docs/news/svfront/077161.htm

-- Martin Thompson (mthom1927@aol.com), July 26, 2001


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