Lucent Technologies announced yesterday that it plans to cut another 15,000 to 20,000 jobs and eliminate its dividend in a bid to return to profitability after recording massive losses in the second quarter.
A spokeswoman for the giant US telecommunications equipment-maker said it was too early to say if jobs will be lost at Lucent operations in Dublin, where the company employs 900 people. However Lucent did not cut employment in Ireland when it announced 10,000 lay-offs in January, she pointed out.
The New Jersey-based company has shed a further 9,000 jobs since January and eliminated 5,500 contract positions, leaving it with about 86,500 employees. On top of the new round of planned job cuts, Lucent will trim an additional 6,000 jobs with the sale of its fiber-optics operations and another 4,500 with the sale of manufacturing assets at two plants.
Ireland is a centre for Lucent's international operations, making it less vulnerable to cut-backs. Its Blanchardstown site is a strategic hub for optical networking operations and at Cabinteely it has a global software development and a financial services centre. The central Dublin office is international HQ for business partner organisation.
However the company is in deep trouble. It has experienced slumping sales as equipment users cut orders and debtors filed for bankruptcy because of the economic slowdown. It has also lost business to competitors that brought faster, new telecommunications gear to market quicker, analysts say.
The fiscal third-quarter loss of $3.25 billion was far bigger than expectations. Shares of Lucent, once one of the most popular stocks on Wall Street fell 16 per cent to $6.61 within hours of the announcement. Last year they hit $50.
Separately, Lucent said it had reached an agreement to sell its fibre-optics cable operations to Furukawa Electric and Corning for a total of $2.75 billion. This will not impact on the optical networking operation at Blanchardstrown, the spokeswoman said.
"I am pleased with the progress we have made on all points of Phase I of our restructuring program," chief executive and chairman Henry Schacht said during a conference call. "However, we intend to go deeper with a new phase of our restructuring to reshape Lucent for future growth and profitability even more quickly."
He conceded that much of the next phase of its restructuring plan hinges on the company's ability to amend the conditions of certain loan agreements with its banks.
For the three months ended June 30, Lucent lost 95 cents per share, compared with a net loss of $301 million, or 9 cents per share, in the same quarter a year ago. Excluding discontinued operations, it lost $1.89 billion, or 55 cents per share. Revenue from continuing operations declined 21 per cent to $5.82 billion compared with $7.41 billion a year ago.
Stocks fell on the Nasdaq Composite Index and the Dow Jones Industrial Average on the news from Lucent and other companies that suggested the slump in corporate profits is far from over.
Telephone and data services company Qwest Communications International in Philadelphia posted a massive $3.31 billion second-quarter net loss after writing down its investment in a European joint venture, and cut its 2001 growth outlook. However AT&T Wireless Services, the No 3 American wireless telephone operator, said second-quarter total revenues jumped 36.5 percent as customers spent more time on their phones.
Amazon.com led the Nasdaq lower after it posted a smaller loss than expected, but said sales growth could slow further. Its shares fell 21 per cent, or $3.38 to $12.65.
Contrary to a report in The Irish Times on Monday that Compaq Computer recently closed its plant at Erskine in Scotland, Compaq still has a fully functioning manufacturing plant in Erskine, a company spokesperson said, though some cuts were made in the work force.
