350 more jobs lost as sales tumble. 200 jobs could be saved via spinoff
Bert Hill
The Ottawa Citizen
Wednesday, October 02, 2002
Just two months after chopping jobs in its Kanata operations, Alcatel swung the axe again yesterday as it struggles with rapidly falling sales.
The Paris telecommunications giant will eliminate 350 more jobs in a second round of cuts from research, sales and manufacturing. It will cut another 50 jobs across Canada.
Some of the 200 manufacturing jobs could be saved if Alcatel is successful in spinning off a high-volume manufacturing operation, possibly to a major contract manufacturer such as Celestica or Solectron.
The latest cuts will reduce Alcatel employment in the Ottawa-Gatineau region to 2,300, down 40 per cent in 15 months from a peak of 3,900 jobs and 34 per cent below the employment base it inherited in its takeover of Newbridge Networks 30 months ago.
An Alcatel spokesperson said the latest cuts were across the board and did not involve eliminating any networking products. The company has frozen salaries in the past year and will extend a program of five days' unpaid leave annually.
After starting much more slowly than Nortel Networks at hacking jobs, Alcatel is now chopping more quickly and almost as deeply.
Alexandre Peterc, a Paris analyst with Exane Equity Research, said in a report distributed by Multex that Alcatel stock "is only for the brave of heart."
He said Alcatel is managing the market contraction better than Nortel or Lucent but that longer-term finances are a danger spot. "It is likely that Alcatel will effectively breach covenants of its credit life-line with banks" which in turn could cause trouble with vendor financing.
Alcatel was insulated from the first phases of the North American communications industry collapse because it sells less than 20 per cent of its products here. But the market trouble spread to Europe, where Alcatel makes 50 per cent of its sales, and to Asia, which accounts for about 17 per cent, in the past six months.
Alcatel sales fell 32 per cent from the March to June quarters and will fall another 10 per cent in the quarter just ended.
A Paris investment house said yesterday that France Telecom, Alcatel's biggest customer, is believed to be cutting equipment spending deeper.
Alcatel chief executive Serge Tchuruk accelerated cost-cutting with last month's sales warning and now plans to reduce the global workforce to 60,000, or 10,000 fewer than originally planned. Alcatel has about 80,000 employees now.
There are signs Mr. Tchuruk has accelerated the timetable to mid-2003 from late 2003.
He had counted on the Kanata networking equipment division to double sales to $5 billion annually after the $7.1-billion takeover of the former Newbridge Networks.
With that plan now in tatters and Alcatel struggling to hold market share in a declining network market, the Kanata operation is no longer sheltered from the first waves of job cuts that hit Alcatel operations hard in the U.S.
Alcatel's major North American operations in Dallas have already been cut in half to 3,500 workers and likely will face more cuts.
Besides cutting 1,000 jobs in Kanata, Alcatel has also shut the Innovative Fibre optical component operation in Gatineau that it bought in 2000 and grew to 450 employees.
Alcatel said it plans to keep a reduced manufacturing operation in Kanata for building prototypes. The operation, which employed more than 1,000 in its heyday, had escaped two earlier spinoff reviews -- one by former owner Newbridge Networks in its final days and again by Alcatel last year.
© Copyright 2002 The Ottawa Citizen
Bert Hill
The Ottawa Citizen
Wednesday, October 02, 2002
Just two months after chopping jobs in its Kanata operations, Alcatel swung the axe again yesterday as it struggles with rapidly falling sales.
The Paris telecommunications giant will eliminate 350 more jobs in a second round of cuts from research, sales and manufacturing. It will cut another 50 jobs across Canada.
Some of the 200 manufacturing jobs could be saved if Alcatel is successful in spinning off a high-volume manufacturing operation, possibly to a major contract manufacturer such as Celestica or Solectron.
The latest cuts will reduce Alcatel employment in the Ottawa-Gatineau region to 2,300, down 40 per cent in 15 months from a peak of 3,900 jobs and 34 per cent below the employment base it inherited in its takeover of Newbridge Networks 30 months ago.
An Alcatel spokesperson said the latest cuts were across the board and did not involve eliminating any networking products. The company has frozen salaries in the past year and will extend a program of five days' unpaid leave annually.
After starting much more slowly than Nortel Networks at hacking jobs, Alcatel is now chopping more quickly and almost as deeply.
Alexandre Peterc, a Paris analyst with Exane Equity Research, said in a report distributed by Multex that Alcatel stock "is only for the brave of heart."
He said Alcatel is managing the market contraction better than Nortel or Lucent but that longer-term finances are a danger spot. "It is likely that Alcatel will effectively breach covenants of its credit life-line with banks" which in turn could cause trouble with vendor financing.
Alcatel was insulated from the first phases of the North American communications industry collapse because it sells less than 20 per cent of its products here. But the market trouble spread to Europe, where Alcatel makes 50 per cent of its sales, and to Asia, which accounts for about 17 per cent, in the past six months.
Alcatel sales fell 32 per cent from the March to June quarters and will fall another 10 per cent in the quarter just ended.
A Paris investment house said yesterday that France Telecom, Alcatel's biggest customer, is believed to be cutting equipment spending deeper.
Alcatel chief executive Serge Tchuruk accelerated cost-cutting with last month's sales warning and now plans to reduce the global workforce to 60,000, or 10,000 fewer than originally planned. Alcatel has about 80,000 employees now.
There are signs Mr. Tchuruk has accelerated the timetable to mid-2003 from late 2003.
He had counted on the Kanata networking equipment division to double sales to $5 billion annually after the $7.1-billion takeover of the former Newbridge Networks.
With that plan now in tatters and Alcatel struggling to hold market share in a declining network market, the Kanata operation is no longer sheltered from the first waves of job cuts that hit Alcatel operations hard in the U.S.
Alcatel's major North American operations in Dallas have already been cut in half to 3,500 workers and likely will face more cuts.
Besides cutting 1,000 jobs in Kanata, Alcatel has also shut the Innovative Fibre optical component operation in Gatineau that it bought in 2000 and grew to 450 employees.
Alcatel said it plans to keep a reduced manufacturing operation in Kanata for building prototypes. The operation, which employed more than 1,000 in its heyday, had escaped two earlier spinoff reviews -- one by former owner Newbridge Networks in its final days and again by Alcatel last year.
© Copyright 2002 The Ottawa Citizen
