Alcatel cuts jobs as other IT firms lower estimates

French telecommunications equipment maker Alcatel will lay off about 5% of its US workforce, the company said yesterday. The news came amid a stream of earnings warnings and staff cuts at high-tech vendors.

          French telecommunications equipment maker Alcatel will lay off about 5% of its US workforce, the company said yesterday. The news came amid a stream of earnings warnings and staff cuts at high-tech vendors including Ariba, i2 Technologies and Inktomi.

          Blaming an overall economic slowdown and shrinking demand for its communications equipment in the US, Paris-based Alcatel says it will cut 1100 positions from its workforce in the US. About 800 of those affected are full-time employees from a number of divisions. The remaining job cuts will affect contractors and temporary employees.

          Alcatel, one of Europe's largest telecommunications equipment makers, employs about 130,000 people worldwide, supplying next-generation networks and terrestrial communications equipment from fibre optics to DSL (digital subscriber line).

          In the US, where the company says it generates roughly 23% of its sales, it has been forced to reduce its operating budget as many of its customers have reduced spending on communications equipment.

          "We're not saying specifically which customers," Alcatel spokesperson Brian Murphy says. Slowing sales have, however, dug into nearly every segment of Alcatel's business. Aside from layoffs, Alcatel says it is shrinking its travel budget, its administrative costs and looking for ways to cut costs in the supply chain.

          "It is important, during these tough economic times in the US, for us to manage down our cost structure better than ever before," Mike Quigley, president of Alcatel Americas, says in a statement. "These types of employee-impacting decisions are very difficult to make, but they are essential given the current US business environment."

          While Alcatel is standing by its quarterly and annual earnings estimates for 2001, it did lower its sales outlook for the year when it released its earnings in January, citing weakening demand in the US.

          The company's mobile phone division also said in early March that it would post a loss on sales of its handsets. Similar troubles have plagued leading handset makers Nokia and Ericsson , both of which have said in the last month they expect layoffs in the face of slowing equipment sales.

          Outside of the US, Alcatel has managed to sign a few big ticket deals this year, including three in Asia. On March 22, the company signed a multi-year deal with China Telecom to sell DSL equipment and services. The same day, it signed a $US180 million deal with China's Jiangsu Mobile to expand its GSM (global system for mobile communications) network and set up a joint research and development initiative in China.

          Also yesterday, e-business applications developer BroadVision said it would lay off 325 people, or 15% of its staff, as it revised its fourth-quarter 2000 earnings and warned of a slowdown in the current year. Broadvision predicts it will post a loss of $US0.14 to $US0.16 per share on revenue of $US85 million to $US90 million for the quarter ended March 31. Analysts had expected the company to show a $US0.02 per share profit on revenue of about $US134 million, according to FirstCall/Thomson Financial.

          Business-to-business software giant Ariba says it will cut 700 jobs, or a third of its staff, and cancel its planned $US2.5 billion merger with Agile Software. (See Ariba to cut 700 jobs worldwide). The company also says it expects to report a loss of $US0.20 per share for its second quarter ending March 31, on revenue of $US90 million. That would be far short of expectations. According to First Call/Thomson Financial, analysts expected Ariba to show a $US0.05 per share profit and $US180 million in revenue.

          And rival supply-chain software maker i2 Technologies says it plans to initiate a cost-cutting initiative, which could include layoffs of about 10% of its 6100-person workforce. I2 says its first-quarter earnings would be $US0.02 per share on revenue of $US355 million, down from analyst consensus estimates of $US0.05 per share.

          Internet infrastructure developer Inktomi, meanwhile, says it will cut its staff by 25% through a combination of attrition and management action as it warned of a wider-than-expected second-quarter loss. The company says it now expects to lose $US0.23 to $US0.25 per share for the second quarter on revenue of $US36 million to $US38 million. Analysts polled by First Call expected the company to bring in revenue nearly twice that and lose only $US0.04 cents per share.

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