Alcatel cutting more jobs, warns of $4.5 billion loss

Recent French suitor for Lucent's hand is also struggling

November 01, 2001|By NEW YORK TIMES NEWS SERVICE

PARIS - Alcatel, one of Europe's largest makers of telecommunications equipment, said yesterday that it will eliminate an additional 10,000 jobs and expects to report a loss of $4.5 billion for the year.

The new reductions follow 23,000 job cuts already announced this year. When the cuts are completed, Alcatel's work force will have been reduced by 30 percent since January, down to 77,000 employees from 110,000.

The company, based in Paris, said it would take a charge of 1.2 billion euros ($1.08 billion) in the fourth quarter because of the latest cuts.

Alcatel, like other big equipment makers such as Lucent Technologies Inc. of the United States, Nortel Networks of Canada and Marconi of Britain, has been struggling this year as telecommunications spending has evaporated worldwide.

Lucent, which Alcatel had unsuccessfully sought to acquire last spring, has said it expects to nearly halve its work force from 106,000; Nortel is also cutting its work force in half, to 45,000. Ericsson of Sweden and Motorola of the United States are also making substantial job cuts.

"The market in Europe is also softening and Alcatel has to react to that," an Alcatel spokesman, Klaus Wustrack, said.

Alcatel also reported a loss of $502.7 million in the third quarter, compared with a profit of $268 million in the quarter a year earlier, based on current exchange rates.

The company's chief executive, Serge Tchuruk warned yesterday that "negative trends in the second half of 2001 will continue into the first half of 2002 at least." He also said that the company would seek to reduce its $4.3 billion debt load.

Still, investors were cheered by the latest round of cost-cutting, and shares of Alcatel rose 6.8 percent in Paris. The company's American depository receipts - which each represent one share of the company - rose $1.17 to $14.93 on the New York Stock Exchange. Alcatel's U.S. shares have recovered somewhat this month, but they are still down 73 percent from the start of the year.

The third-quarter "figures were not great but there are some reasons to hope for a recovery next year," Jacques-Antoine Bretteil, a fund manager in Paris, told Reuters.

And Tchuruk noted that Alcatel was gaining market share, and that Alcatel's revenue declines were not as steep as many rivals.

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