Alcatel cuts forecasts and jobs

PARIS, France (Reuters) -- French telecoms equipment maker Alcatel announced around 1,000 additional job cuts at its Optronics unit on Tuesday as it braces for a 50 percent slump in third-quarter sales versus the second quarter.

Alcatel said the impact of the slowdown on operating profit should be limited, however, thanks to previously implemented cost-saving measures.

Alcatel Optronics has been hit by a slump in demand for optical components from cash-strapped telecoms operators, which also has led rivals such as Nortel, Lucent and ADC to make similar warnings for the current quarter.

"This is a pure reflection of the collapse of the submarine optical market,'' said analyst Philippe Schmitt at BNP Paribas in London, who has a "neutral'' rating on Alcatel and has an "underperform'' rating on the wider sector.

"The stock has been particularly hammered already, so most of the negative news is already priced in,'' he added.

Alcatel shares, which have slid steadily from a year high of 21.62 euros in January, were down 1.9 percent at 3.62 euros at 0909 GMT. By comparison, the Dow Jones Stoxx European technology index was up 1.5 percent.

Tracking shares in Alcatel Optronics were unchanged at 2.61 euros as analysts welcomed the job cuts as a sign Alcatel was grasping the nettle in adapting its industrial base to the slowdown in activity.

The shares fell to a life low of 1.61 euros in July, leading to speculation that parent Alcatel might delist the stock.

Alcatel said it would progressively cut headcount in Nozay, France and Livingston, Scotland, to below 500 by the end of 2003 from 1,550 staff today.

The decrease in fixed costs should result in a quarterly sales break-even point of 40 million euros by end-2003, it said.

The Nozay factory will shift its focus to making so-called ``active'' components, while Livingstone will concentrate on the manufacture of ``passive'' parts, Alcatel said in a statement.

Alcatel Optronics had already announced in June a plan to cut a quarter of its workforce by year-end, to 1,350, leading to a charge of 60 million euros. It cut 800 jobs last year.