Alcatel sees loss, more job cuts

Alcatel CEO Serge Tchuruk expects more surgery before company turns to profit

PARIS, France (CNN) -- Shares in French telecom equipment maker Alcatel plunged after it issued a profit warning and confirmed more job cuts next year, saying clients were not buying new equipment.

Chief Financial Officer Jean-Pascal Beaufret said the company would post an operating loss this year. As recently as April, the company had predicted it would make a operating profit for the year.

Paris-based Alcatel, which has already announced 32,000 job cuts in an effort to return to profitability, said it plans to accelerate restructuring efforts to cut costs by 12 percent in 2003 compared with 2002.

A company spokesman told CNN that Alcatel would double its restructuring charge to 1.2 billion euros. About 20,00 jobs will go this year and another 10,000 in 2003, bringing the remaining workforce down to 70,000.

Alcatel -- along with other equipment makers -- has been hit hard by the cash crisis afflicting telecom operators, whose heavy investment in external growth and new technology in recent years has left them with debt mountains and little to spend on new infrastructure.

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Phone companies -- like BT Group, Deutsche Telekom and France Telecom -- are cutting back investment plans. WorldCom said late on Tuesday it would restate financial accounts after discovering improper bookkeeping -- a move that could leave the troubled telecom close to bankruptcy.

Alcatel's stock fell 27 percent to 6.83 euros, before recovering slightly to 7.81 euros in afternoon Paris trading on Wednesday.

Alcatel -- one of the world's top three telecom equipment suppliers -- expects sales in the second quarter to be practically flat compared with the first quarter, while operating profit would improve as forecast by about 100 million euros, compared with the first quarter.

It said the new plan would reduce its quarterly break-even point to below an average of 4 billion euros of sales in 2003.

As for the current year, Alcatel said its quarterly break-even point that had previously been established at 4.7 billion euros for 2002 had been brought down to 4.5 billion.

The company posted a first quarter net loss of 836 million euros in April, and made a 1.5 billion euro loss in the fourth quarter of 2001. Last year, it posted a net loss of 4.96 billion euros.