Lucent to Cut 5,000 More Jobs - Source
By Ben Klayman
CHICAGO (Reuters) - Telecommunications equipment maker Lucent Technologies Inc. (NYSE:LU - news) plans to cut about 5,000 more jobs than previously expected by the end of June because of the slowdown in the telecom sector, a source close to the company said on Thursday.
``It's not like a whole new program of restructuring. It's a lot of little snips that will get the company (staff) to more like 50,000 by the end of June,'' the source told Reuters.
Lucent officials declined to comment and a spokeswoman said the company would provide an update on its staffing levels when it reports fiscal second-quarter earnings on April 22.
The Murray Hill, New Jersey-based company had 62,000 employees at the end of last year, and had previously said it planned to reduce that count to under 55,000 by the end of June. The latest cuts would reduce the work force to slightly above 50,000, the source said.
CUTS NOT ENOUGH
Analysts and investors said the cuts were not large enough given the industry and company weakness.
``We've been saying and continue to say the company needs to take down more staffing levels,'' Salomon Smith Barney analyst Alex Henderson said. ``I don't think paring 5,000 people is enough.''
He said from the 55,000-job level, Lucent needs to cut another 10,000 to 15,000 positions, and the additional 5,000 would not be enough to get Lucent to the break-even point.
Richard Steinberg, president of Steinberg Global Asset Management, a Florida asset management firm that owns Lucent shares, added: ``We know it's not enough. It's just another step. They probably want to do more, but maybe it's better to cut into muscle slowly.''
Lucent's stock closed off 11 cents, or 2.73 percent, at $3.92 in heavy trading on the New York Stock Exchange. Earlier in the day, it fell to $3.79, the lowest level since its 1996 spinoff from AT&T Corp. (NYSE:T - news)
Since the start of last year, the stock has fallen about 71 percent, about the same decline seen by the American Stock Exchange Networking Index. (^NWX - news)
STRUGGLING TELECOM SECTOR
Last month, Lucent lowered its fiscal second-quarter outlook, saying revenues would rise modestly or up to 10 percent from the previous quarter, compared with a previous forecast 10 to 15 percent growth.
There are signs the struggling telecom spending market has not shown signs of beginning a long-awaited rebound, as carriers such as Qwest Communications International Inc. (NYSE:Q - news) and Sprint Corp. (NYSE:FON - news), both large Lucent customers, have continued to slash spending.
The source said Lucent was still completing job cuts in Europe and the Asia Pacific under the original plan, but the company had found the additional cuts equally through attrition, shifting work to outside manufacturers and layoffs in the face of lower sales.
Lucent said last month it still expected improvement from the first-quarter loss of 23 cents a share before one-time items.
The company also put off until 2003 its estimate for a return to profitability from the current fiscal year, and said the expected spinoff of its remaining stake in Agere Systems Inc. (NYSE:AGRa - news) would be delayed until the third quarter.
Analysts expect Lucent to report second-quarter revenues of $3.58 billion and a loss before one-time items of 17 cents a share, with loss estimates ranging from 11 cents to 22 cents, according to Thomson Financial/First Call.
Expectations are already rock bottom for Lucent and its competitors, given the weak telecom environment, analysts said.
Another large Lucent customer, Verizon Communications (NYSE:VZ - news), the largest local telephone company in the United States, said on Tuesday its revenues were unlikely to improve in the weak economy.
Verizon added it would cut capital spending to a range of $15 billion to $16 billion in 2002, down from $17.4 billion last year. Some analysts think the number could go even lower.
Lucent rival Nortel Networks Corp. (NYSE:NT - news; Toronto:NT.TO - news) on Tuesday warned its first-quarter revenue would come in lower than expected due to sagging demand.
By Ben Klayman
CHICAGO (Reuters) - Telecommunications equipment maker Lucent Technologies Inc. (NYSE:LU - news) plans to cut about 5,000 more jobs than previously expected by the end of June because of the slowdown in the telecom sector, a source close to the company said on Thursday.
``It's not like a whole new program of restructuring. It's a lot of little snips that will get the company (staff) to more like 50,000 by the end of June,'' the source told Reuters.
Lucent officials declined to comment and a spokeswoman said the company would provide an update on its staffing levels when it reports fiscal second-quarter earnings on April 22.
The Murray Hill, New Jersey-based company had 62,000 employees at the end of last year, and had previously said it planned to reduce that count to under 55,000 by the end of June. The latest cuts would reduce the work force to slightly above 50,000, the source said.
CUTS NOT ENOUGH
Analysts and investors said the cuts were not large enough given the industry and company weakness.
``We've been saying and continue to say the company needs to take down more staffing levels,'' Salomon Smith Barney analyst Alex Henderson said. ``I don't think paring 5,000 people is enough.''
He said from the 55,000-job level, Lucent needs to cut another 10,000 to 15,000 positions, and the additional 5,000 would not be enough to get Lucent to the break-even point.
Richard Steinberg, president of Steinberg Global Asset Management, a Florida asset management firm that owns Lucent shares, added: ``We know it's not enough. It's just another step. They probably want to do more, but maybe it's better to cut into muscle slowly.''
Lucent's stock closed off 11 cents, or 2.73 percent, at $3.92 in heavy trading on the New York Stock Exchange. Earlier in the day, it fell to $3.79, the lowest level since its 1996 spinoff from AT&T Corp. (NYSE:T - news)
Since the start of last year, the stock has fallen about 71 percent, about the same decline seen by the American Stock Exchange Networking Index. (^NWX - news)
STRUGGLING TELECOM SECTOR
Last month, Lucent lowered its fiscal second-quarter outlook, saying revenues would rise modestly or up to 10 percent from the previous quarter, compared with a previous forecast 10 to 15 percent growth.
There are signs the struggling telecom spending market has not shown signs of beginning a long-awaited rebound, as carriers such as Qwest Communications International Inc. (NYSE:Q - news) and Sprint Corp. (NYSE:FON - news), both large Lucent customers, have continued to slash spending.
The source said Lucent was still completing job cuts in Europe and the Asia Pacific under the original plan, but the company had found the additional cuts equally through attrition, shifting work to outside manufacturers and layoffs in the face of lower sales.
Lucent said last month it still expected improvement from the first-quarter loss of 23 cents a share before one-time items.
The company also put off until 2003 its estimate for a return to profitability from the current fiscal year, and said the expected spinoff of its remaining stake in Agere Systems Inc. (NYSE:AGRa - news) would be delayed until the third quarter.
Analysts expect Lucent to report second-quarter revenues of $3.58 billion and a loss before one-time items of 17 cents a share, with loss estimates ranging from 11 cents to 22 cents, according to Thomson Financial/First Call.
Expectations are already rock bottom for Lucent and its competitors, given the weak telecom environment, analysts said.
Another large Lucent customer, Verizon Communications (NYSE:VZ - news), the largest local telephone company in the United States, said on Tuesday its revenues were unlikely to improve in the weak economy.
Verizon added it would cut capital spending to a range of $15 billion to $16 billion in 2002, down from $17.4 billion last year. Some analysts think the number could go even lower.
Lucent rival Nortel Networks Corp. (NYSE:NT - news; Toronto:NT.TO - news) on Tuesday warned its first-quarter revenue would come in lower than expected due to sagging demand.
