Alcatel sees lower sales and 13,000 fewer jobs

Citing a further worsening of the market for telecommunication equipment, Alcatel announced 13,000 more job cuts last Friday and lowered its second-half sales forecast.

The announcement marks the second company-wide staff reduction announced by Alcatel this year. In June, the Paris company said it would shed 10,000 jobs by the end of next year. That number has now been increased to 23,000, an Alcatel spokesman said.

Sales for the second half of the year are now expected to be about 10 percent below the first half, when Alcatel reported net sales of €8.53 billion (US$ 8.46 billion as of June 30, the last day of the period being reported.) Alcatel in July expected second-half sales to come in close to the first half amount.

Alcatel has been restructuring since mid-2001 to keep its head up in a down economy. The company employed 99,000 people at the end of 2001. That number was brought down to 83,000 in June this year. The target now is to reduce headcount to about 60,000 by the end of 2003, the spokesman said.

Like its rivals Lucent Technologies Inc. and Telefonaktiebolaget LM Ericsson, Alcatel has been suffering from the slump in demand for telecommunication equipment. The company has set a target to reach break-even on quarterly sales of €3 billion by the end of next year. The company has to cut fixed costs, such as staff, to meet its goal. It reported sales of €4.24 billion in this year's second quarter.

Alcatel won't yet disclose how the additional cuts will affect its various business segments. Earlier this week, however, the Optronics division, which makes components for optical fiber networks, detailed its plan to lay off two-thirds of the 1,550 people it currently employs by the end of 2003. Alcatel said it will book €500 million as an additional restructuring charge over the next three quarters. More details on the restructuring will be given in the companies third quarter conference call on Oct. 30, according to an Alcatel statement.

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