Cost cuts gather pace at Alcatel

The company had already unveiled plans to trim its staff numbers from 83,000 at the end of June to about 70,000 by the end of the year.

But Alcatel said it was now looking to reduce its workforce to 60,000 by the end of 2003.

It added that it expected revenue in the second half of the year to be 10% lower than the first half, and said it would take a restructuring provision of 500m euros ($490m; £317m) over the next nine months.

Shares rebound

Earlier in the week, Alcatel had said that it planned to cut jobs at its plants in France and Scotland.

But a spokesman for the firm said on Friday that no decision had yet been made on where the new job cuts would be made.

Like most firms in the telecoms sector, Alcatel has seen demand for its products shrink dramatically over the past year.

The company was forced to deny it was facing a cash squeeze on Thursday, and after worries about its financial position led its shares to fall by 17.7%.

Alcatel's shares tumbled a further 15% to 2.13 euros immediately after the news of the latest round of job cuts, but then recovered to close up 7.6% at 2.70 euros.

"The profit warning is a little stronger than we anticipated but it is not a surprise because demand in the third quarter was weaker than expected and their target for second-half sales to equal first-half sales was not realistic anymore," said one analyst.

"I think worries about their short-term solvency are exaggerated... but it's true their outlook is pretty grim and we could see more drastic decisions from the company," he added.