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Thursday, 13 December, 2001, 17:33 GMT
US corporate woes continue
The flow of grim news from US companies showed no sign of stopping on Thursday after the country's largest health insurer said it was cutting one sixth of its staff and a telecoms giant warned of greater than expected losses.

Hartford, Connecticut-based Aetna said it was ditching 6,000 jobs from its 37,000 workforce because rising medical costs are reducing membership levels.

Meanwhile, Lucent Technologies, a Murray Hill, New Jersey-based telecoms equipment maker, said it expects sales to drop to $3.1bn-$3.4bn during the final three months of the year, down from $4.8bn during the previous three-month period.

The company blamed a sustained slump in capital spending by telecoms operators.

Slump poised for turnaround?

Lucent, formerly part of AT&T, has been in deep trouble for some time, racking up losses of more than $8bn in the last-reported three months of its business year.

It said losses for the first quarter of its next business year would come in at 23-26 cents a share, compared with mean analyst forecasts of a 17 cent-a-share loss.

But the company said the final three months of 2001 will mark the bottom of the market downturn.

It said it expected to return to profitability in its next business year.

However, investors weren't convinced, pushing Lucent's share price 93 cents lower to $6.80 at about 1630 GMT.

Profitability over size

Aetna said the latest round of lay-offs was designed to "to properly align our business resources with lower membership levels and our stated goal of emphasising profitability over size".

"With health membership levels in 2002 expected to decline materially as a result of implementing pricing that is more reflective of projected medical cost trends... we must be sized to match the needs of our business," said chairman and chief executive John Rowe.

The company is to take a $125m after-tax charge in the fourth quarter to pay for the restructuring.

Analysts said the job cuts are aimed at scaling the company down permanently.

"From a medical membership perspective, it is going to be a smaller company," said John Rex, analysts at Bear Stearns.

"As a result they need to resize the administrative infrastructure."

Aetna shares were trading 12 cents lower at $30.92 at 16.30 GMT.

See also:

23 Oct 01 | Business
Lucent racks up $8bn loss
24 Jul 01 | Business
Lucent axes 20,000 more jobs
12 Dec 01 | Business
BT lures Lucent boss with 7m package
12 Mar 01 | Business
Wagons west, profits south?
06 Dec 01 | Business
ING sheds 1,600 jobs
11 May 01 | Business
US insurance giants merge
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