2 telecom companies in Europe lopping jobs

Marconi, Siemens hit by slow equipment sales

April 11, 2001|By BLOOMBERG NEWS

LONDON - Marconi PLC and Siemens AG said yesterday that they will cut 5,000 jobs to trim costs as a slowing economy crimps sales of telecommunications equipment and mobile phones.

Marconi, the UK's largest maker of phone equipment, said it will cut 3,000 jobs - 5.5 percent of its staff - in the next 12 months. Siemens, Europe's No. 2 mobile- phone producer, will eliminate 2,000 temporary workers, a quarter of those making handsets.

Slowing growth has led phone companies to reduce equipment purchases. Marconi and Siemens join European rivals Ericsson AB and Alcatel SA in eliminating workers. In North America, Lucent Technologies Inc., Motorola Inc. and Nortel Networks Corp. have announced plans to slash more than 50,000 jobs.

"These companies need to cut costs wherever they can," said Ben Hauzenberger, who manages $400 million in telecom stocks at Winterthur Credit Suisse Group in Zurich, and holds shares of Ericsson and Nokia Oyj. "They are adapting to reality."

Marconi shares rose 31 pence (41 U.S. cents), or 10 percent, to 341p ($4.88) after the company also said it expects fiscal 2001 operating profit to meet analysts' forecasts.

There are growing signs that slower U.S. economic growth is spreading to Europe. Germany's six leading research institutes today lowered their forecast for economic growth in Europe's biggest economy from 2.7 percent to 2.1 percent and urged the European Central Bank to reduce interest rates.

France Telecom SA, Deutsche Telekom AG and other European phone companies are trying to reduce debt and cut costs after spending more than $90 billion on licenses to provide mobile phone services with faster Internet access. They also are seeking ways to finance the construction of the networks to provide these services, which may cost another $200 billion.

Siemens said it won't extend temporary contracts of 2,000 workers at its three German production sites. Siemens blamed the cuts on slowing growth.

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