Global Crossing Holdings Ltd., the bankrupt telecommunication vendor under investigation by the U.S. Securities and Exchange Commission (SEC), announced a series of measures Friday aimed at trimming costs and streamlining operations, including a 1,600-person layoff and the possible sale of some of its assets.
The once-high-flying Global Crossing filed for bankruptcy protection on Jan. 28, claiming more than US$20 billion in liabilities at the time. The company is also facing an SEC probe over its accounting practices. Friday's announcements, with their attendant cost savings, are designed to shore up Global Crossing's finances.
Eight hundred employees will lose their jobs due to previously announced cuts, effective Friday, but an additional 1,600 jobs will go by March, primarily from administration and sales, according to a statement from Global Crossing. The moves will bring the company's total head count to fewer than 6,000, down from about 15,000 at the beginning of January.
Management will also be feeling a pinch, the company said, as there will be salary reductions for senior management and some other managers.
Further cost-cutting moves could come if the company sells parts of its operations in the United Kingdom. Global Crossing is considering selling both its conferencing division and its noncore network in the U.K., the company said.
The company will also close 71 offices worldwide, which will result in an annual savings of $150 million, it said.
Those measures are expected to reduce operating expenses by $600 million dollars, from $1.5 billion in 2001 to $900 million in 2002, Global Crossing said. Capital expenditures, excluding Asia Global Crossing Ltd., for 2002 will be slashed to $200 million, down $3 billion from 2001.
The duties of a number of executives are also being shuffled, according to the company. Anthony Christie, senior vice president of product management, will now be running the company's conferencing business and preparing it either for sale or to be run as a self-sufficient business, the company said. Jose Antonio Rios, president of Latin American and Caribbean operations, will add European operations to his resume. Lastly, Dan Wagner, the former head of European operations, will assume the mantle of senior vice president of information technology, real estate, procurement and vendor management.