While Lucent and Nortel have halved their workforces, Alcatel has lagged behind in its efforts to bring costs into line COMMENTS: Exactly as I wrote in myposting:
This is how it should be done:
Message 16513379
with the shrinking market for telecommunications equipment. That reluctance has been justified in part by Alcatel's geographical weighting in Europe, where sales have held up better than in the US. Now it has acknowledged the need to go much further: another 10,000 jobs to go, on top of the 22,500 announced, all in Europe, where its excess capacity is most marked.
This round of job cuts will be more expensive than those Alcatel has undertaken in the US, and may not feed through until well into the second half of next year. Still, by targeting a cost base that will enable it to break even on sales running at E5bn a quarter, Alcatel is showing a new realism. It sets the clock back to 1997 sales levels, where its old break-even target of E5.5bn a quarter rolled it back only to 1999.
This is not all good news. If the axe is falling in Europe, that shows the downturn in capital expenditure is spreading to telecoms service providers there, too. This is not something one would detect from Alcatel's commentary on the third quarter, which attributes most of its woes to the US.
Even with further dramatic improvements in working capital - Alcatel is expecting a drop of almost E1.2bn in the current quarter - it is not clear how the company will reduce its debt from E5.5bn to its target of E4bn by year end without asset sales.
Alcatel
Published: October 31 2001 20:16 | Last Updated: October 31 2001 20:20
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