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Alcatel to cut 10,000 jobs
PARIS, France (CNN) -- France's Alcatel, whose shares have been battered this week, said it would cut 10,000 jobs and issued another profit warning. The French company said it would reduce its "headcount to around 60,000 employees by the end of 2003." Europe's biggest maker of telecoms equipment said in June it would cut its workforce to 70,000 by the end of next year. At the end of December 2001, the company employed 99,000 people. The latest round of job losses takes the total number of people to lose their jobs to 39,000 by the end of 2003. It said sales in the third quarter would fall by 15 percent from the previous three months as telecom operators continue to cut or delay spending. The company said it would spend 500 million euros ($492 million) over the next three quarters to restructure its business to return to profitability. "Due to further deterioration of telecoms markets, Alcatel will present to employee representatives an amplification of its restructuring programme to maintain the previously announced goal of a profit restoration in 2003,'' Alcatel said in a statement. Alcatel, whose stock price fell again -- by 10 percent -- on the news, said second-half sales were set to decline 10 percent compared to the first half on a like-for-like basis. The company has expected second-quarter sales to be "practically flat" in the second quarter compared to the first. The company now predicts to break even on quarterly sales of 3 billion euros by the end of 2003. That's down from the previous average estimate of 4 billion euros of sales. The company's stock hit a new low of 2.13 euros before reversing course, rising more than 6 percent to 2.66 euros in early Paris trading on Friday. Its stocks started the year at 21.62 euros. "It's ridiculous that the market can wipe 50 percent off what was one of the jewels of corporate France,'' fund manager Jacques-Antoine Bretteil at International Capital Gestion told Reuters. "Yes, they have problems, but the fact they won't meet sales isn't really a surprise -- you only have to look at their peers. We've got to the point where prices just don't correspond to reality,'' he said. 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. Its biggest customer France Telecom [PAR:PFTE] is struggling with debts of 70 billion euros. Phone companies -- like BT Group, Deutsche Telekom and France Telecom -- are cutting back investment plans.
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