French telecommunications equipment manufacturer Alcatel is to cut around 10,000 jobs as part of a cost cutting exercise. The company is being forced to cut costs due to weak demand and over capacity in its industry. Alcatel plans to cut its costs by up to 12% by the end of 2003.
The announcement of job cuts was coupled with the news that the company has informed investors that it forecasts lower than expected business in the second half of this year, due to the increasing spending constraints of service providers. The gloomy outlook is in sharp contrast to Alcatel’s statement released in April that said the company had reached the bottom of the current market downturn in Q1. Alcatel had also predicted sequential growth in revenue and income from operations.
The company had a workforce of 99,000 at the end of last year. Alcatel plans to cut staff numbers to 80,000 by the end of 2002. The workforce will be cut again by the end of 2003 in order to meet the company’s planned cost cutting measures. Alcatel has set aside E1.2 billion to help with the restructuring of its operations.
Alcatel’s shares fell 13.4% following the news of the company’s need to cuts costs and jobs.