Alcatel job cuts reach 14,000

Alcatel wants to save 1bn euros

French telecoms equipment maker Alcatel plans to have cut 14,000 staff by the end of 2001, in an effort to increase cost savings by 1bn euros.

In addition, Alcatel said it would cut 4,000 contract worker positions and transfer 2,000 employees through outsourcing programmes.

The US downturn, which we do not see improving for the rest of 2001, may spread to certain parts of Europe

Serge Tchuruk
Alcatel

It said 60% of the overall reductions have already been carried out during the first half of the year.

The 14,000 includes about 8,000 departures in the US, 1,000 in Asia Pacific and 4,000 in Europe and the Middle East.

A spokeswoman in Paris said that most of the job cuts have already been announced. The remaining departures will come from natural turnover and offers of voluntary redundancy or early retirement.

Alcatel had 110,000 staff, excluding its former energy cable unit Nexans which it sold in June, at the end of 2000.

The full impact of the cost savings program should be felt in the fourth quarter, the company said, "and should show a large reduction compared to the same quarter last year."

Net loss

The firm is in the process of selling off almost all its plants, but has previously made little comment on the likely impact on its workforce.

Also on Thursday, Alcatel reported a second quarter net loss of 3.1bn euros, compared with a profit of 344m a year earlier.

The result was marginally worse than forecast by analysts, who had expected a loss of between 2.6bn and 3.1bn euros, taking account of a 3bn euro exceptional charge.

"The US downturn, which we do not see improving for the rest of 2001, may spread to certain parts of Europe, much as it already has, for example, to the UK," said Alcatel chief executive Serge Tchuruk.

"This negative trend in volumes should translate into lower third quarter sales year-on-year, while full year sales should be close to last year's level."

The results cheered the French markets, which had expected the forecast to be worse than this.

At opening, Alcatel's shares bounced up by nearly 5% in Paris.

Operations chief steps down

The company also announced on Wednesday that its chief operating officer Krish Prabhu would be quitting his job.

Mr Prabhu, who was seen as a likely successor to Mr Tchuruk, said he wanted to spend more time with his family.

"My only reason for leaving is that I want . . . better balance in my personal life. There's never a good time to leave."

He added: "When times are good, you leave the investors expecting a calamity and when times are bad, investors believe that your departure will impact the recovery."

Mr Prabhu will continue to advise Mr Tchuruk and will sit on Alcatel's board.

He said that he would consider coming back if the company wanted him to the next chief executive.