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Cable and Wireless share price went into free-fall this afternoon after it announced that the economic downturn in the US and Japan would hit revenues.

The telco said it would cut 4,000 jobs globally over the next 12 months in a bid to reduce overheads - 2,500 of which will go in the UK.

Cable & Wireless said that revenue has fallen in the US, blaming certain market prices for internet connectivity that have fallen by up to 50 per cent, and in Japan, where international voice prices have declined by 40 per cent in the last ten months.

Cable and Wireless plc CE, Graham Wallace, said in a statement: "Certain sectors of Cable & Wireless Global's market are experiencing severe price reductions.

Despite these price pressures, we expect to increase revenue in Cable & Wireless Global by around 12 per cent in the year ending 31 March 2001, but with reduced margins.

"Our response is to reduce costs aggressively, focus our resources on higher margin revenue and accelerate the deployment of value added services, such as managed web and application hosting.

"Today's announcement has outlined how we will do that.

"The overall market for our services, particularly in IP, continues to expand rapidly. As this market continues to develop, we believe that our financial strength and focus on margins and costs leaves us strongly placed," he said.

Shares in C&W opened this morning at 676p and rose to 706p before falling sharply after lunch. By late afternoon they had plummeted 134p (19.62 per cent) to 549p. ®

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