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ComputerWire: IT Industry Intelligence

Alcatel has given up hope of making a profit this year and the telecoms equipment vendor plans to cut its workforce by another 10,000 as it sees no sign of an upturn in spending by the world's carriers.

In April, the Paris, France-based company was far more confident than its US competitors and said it had hit the bottom of the current market downturn in the first quarter. It then forecast quarterly sequential growth in revenue and income from operations turning positive by the second half. But after a nasty reality bite, it now offers nothing but pessimism.

It forecasts lower-than-expected business in the second half due to the increased spending constraints of service providers, though it is confident it can reduce net debt by the year end.

With revenue remaining sluggish, Alcatel is forced again to cut costs. While it originally aimed to cut quarterly break-even costs to 4.7bn euros ($4.7bn) by the end of this year, it is now looking to reduce this to 4.5bn euros ($4.4bn). As the business climate continues to worsen, Alcatel now aims to get quarterly costs down to 4bn euros ($3.9bn) on average during 2003.

Alcatel's workforce, which was around 99,000 at the end of last year, will be cut to 80,000 by the end of 2002 and fall to around 70,000 by the end of 2003. The company has set aside 1.2bn euros ($1.18bn) for the restructuring operation.

The company's shares fell by 13.4% to 8.10 euros ($8.01) on the Paris Stock Exchange.

© ComputerWire

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