WRAP: HK's PCCW Lays Off 858, Leaves Door Open For More
March 25, 2002
FROM THE ARCHIVES: March 25, 2002
DOW JONES NEWSWIRES
HONG KONG -- Pacific Century CyberWorks Ltd. (PCW), Hong Kong's largest telecommunications company, Monday laid off 858 employees to cut costs, and left the door open for more.
The layoffs will result in a one-off charge of HK$110 million and save the company HK$260 million a year, PCCW said.
In a letter to staff, Chairman and Chief Executive Richard Li said previous staff cuts, reductions in capital spending and a number of initiatives to control expenses are "simply not enough if the company is to prosper long term."
"PCCW must continue to undergo the structural transformation from a monopoly supplier to an effective competitor in the deregulated telecommunication market," Li said. "We have reached the regrettable but unavoidable decision that there is no choice" but to cut more staff.
The layoffs represent 6% of the around 14,000 employees the company had at the end of 2001.
Monday's layoffs come after PCCW reduced its staff by nearly 1,000 employees last year.
In December, the company laid off 506 employees, citing an extremely difficult economic situation and intense competition within the telecom industry since the opening up of Hong Kong's fixed-line market.
Li said Monday there has been no significant improvement in the overall economic situation in Hong Kong since December and the company also faces intensifying competition in the lead up to the full liberalization of the fixed-line market in 2003.
"Accordingly, it remains vital that we continue our drive to become more efficient," he said.
In 2001, the company cut capital expenditure 41% to HK$2.4 billion from HK$4.1 billion, he said.
Last week, PCCW reported a net profit of HK$1.89 billion for 2001 compared with a loss of HK$129.3 billion in the previous year. Earnings before interest, tax, depreciation and amortization rose 20% to HK$7.40 billion from a pro forma HK$6.16 billion in 2000. The pro forma numbers treat the acquisition of Hong Kong's dominant fixed-line operator Cable & Wireless as if it had taken effect in January 2000.
At the earnings presentation, Li promised to make the company more efficient by reducing operating and capital expenditures further and by investing in new technology. However, he also kept the door open for further layoffs.
"I can't guarantee there won't be any staff cuts," he said last Wednesday.
And in Monday's letter he added that given the regulatory and market environment in Hong Kong it is "not possible to give an absolute assurance that there will be no further job losses."
Li said the company has decided to set up a fund to assist laid-off employees and added that he would personally contribute to the fund.
PCCW's share price was little moved by the news. It traded in a narrow range between HK$2 and HK$2.025 through the day, ending at HK$2, down 2.4%. The benchmark Hang Seng Index closed with a loss of 0.2%.
-By Anette Jonsson, Dow Jones Newswires; 852-2802-7002; anette.jonsson@dowjones.com
URL for this article:
online.wsj.com
Updated March 25, 2002 4:38 a.m. EDT
Copyright 2002 Dow Jones & Company, Inc. All Rights Reserved
Printing, distribution, and use of this material is governed by your Subscription agreement and Copyright laws.
For information about subscribing go to wsj.com
Used with permission of wsj.com |
