Alcatel shuts three U.S. facilities, cuts 900 jobs

Three days after scrapping its merger talks with Lucent Technologies, French telecommunication equipment maker Alcatel SA said it plans to shut three facilities in the U.S. and lay off 900 employees, or about 6 percent of its U.S. workforce.

Alcatel will close facilities in Portland, Oregon; Milpitas, California; and Andover, Massachusetts, in a bid to cut costs in the face of slowing demand from customers in the U.S., said spokesman Brian Murphy.

Most of the cuts will occur at Alcatel's Portland facility, where the equipment maker manufactures undersea cable. It will cut 480 jobs at that plant and shift the cable production to locations in France and Australia, Murphy said.

A further 425 jobs will be cut at plants in Milpitas and Andover, where Alcatel develops products including edge routers and its media gateway product. Those development efforts will be shifted to existing Alcatel locations in Canada and Europe.

The consolidation is expected to take place throughout the second and third quarters of fiscal 2001 and be completed by the fourth quarter, Alcatel said in a statement. The moves should allow the company to operate more efficiently until business conditions improve in North America, Mike Quigley, president of Alcatel Americas, said in the statement.

Alcatel didn't say how much it expects to save through the consolidation effort.

Alcatel employs about 130,000 employees worldwide and had sales in 2001 of 31 billion euros (US$26.2 billion). After the layoffs, it will be left with about 15,000 workers in the U.S., Murphy said.

Alcatel and Lucent announced Tuesday that they had scrapped talks over a possible merger, a deal that analysts had valued at about $32 billion. Today's announcement wasn't related to the breakdown in talks with Lucent, according to Murphy.

In April, Alcatel revised its financial forecast for the year, blaming uncertain business conditions and a slowdown in customer spending in the U.S. market. It said it expected revenue from its telecommunication business to grow between 5 percent and 15 percent for the year, compared to its previous forecast of 20 percent, and said at the time that it would take action to trim costs.

Alcatel's (ALA) shares on the New York Stock Exchange were trading at $25.41 at the time of this report, up about a half percent from Thursday's close.

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