From: TheStandard.com [mailto:[log in to unmask]] Sent: Wednesday, May 30, 2001 6:26 PM
To: Intelligencer Europe
Subject: INTELLIGENCER EUROPE: Alcatel Says Plan B Will Include Job Cuts
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THE INDUSTRY STANDARD EUROPE'S
I N T E L L I G E N C E R E U R O P E
This Week in the European Internet Economy
=====================================================================
Wednesday, 30 May 2001
TOP STORY:
* Alcatel Says Plan B Will Include Job Cuts
WORTH REPEATING:
* Of gamblers and tech workers
THE WEEK:
* News highlights
BY THE NUMBERS:
* MBA students lose entrepreneurial zeal
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TOP STORY
~~~~~~~~~
Alcatel Says Plan B Will Include Job Cuts
By Kristi Essick - Paris Bureau Chief
Before its bid to acquire Lucent failed last night, Alcatel was riding
high in the high-tech limelight. But on Wednesday the company showed
it is just another victim of the market downturn by announcing heavy
losses and a massive restructuring plan.
CEO Serge Tchuruk glumly said during a conference call this afternoon
that the plan - which calls for layoffs, the closing of some business
units and the disposal of certain strategic investments - would help
right what has become "the tragedy of Alcatel in light of the current
market conditions."
Alcatel expects to be hit with a $2.6 billion net loss for its
telecom-related activities in the second quarter, due in large part to
dismal mobile-handset sales, costs related to restructuring, and
backed-up inventory.
Tchuruk said his company will generate $1.7 billion before the end of
the year by instigating several restructuring tactics. Notably,
Alcatel plans to float its cable division Nexans in the second quarter
and withdraw from the mobile-handset manufacturing business.
Alcatel said now plans to focus on carrier networking and optics, and
on its space activities. Together, these three segments represent over
80 percent of Alcatel s telecom activities.
Tchuruk would not specify how many of Alcatel s 130,000 employees
would lose their jobs, but he did say "there will be a lot of
restructuring in Europe." Some employees in the U.S. and Asia can also
expect to lose their jobs, he said. Of the $1.7 billion Alcatel hopes
to generate in the second half of this year, half would come from
internal cost cutting.
Now that Alcatel s dreams of acquiring the U.S. bellwether Lucent are
in tatters, the company is left without a clear U.S. strategy. But
Tchuruk said the company will continue with its plans to become a U.S.
leader in carrier network equipment, optics and ADSL.
"Alcatel started from nowhere in the U.S. and has developed the
fastest among all the players," Tchuruk said. "Our objective to be an
even bigger player remains absolutely essential, and I will personally
see to it that we continue on that path."
----------------------------------------------------------------------
WORTH REPEATING
~~~~~~~~~~~~~~~
"Even if they lose a ton of money, they tend to go back. They still
think they re going to hit it."
Santa Clara University psychology department chairman Thomas Plante,
comparing tech workers to gamblers. Quoted by the San Jose Mercury
News.
----------------------------------------------------------------------
THE WEEK
~~~~~~~~
VODAFONE COOLS IT: Vodafone, the world's largest mobile-phone
operator, reported profits up a staggering 87 percent for last year,
on a pro forma basis. The figures were not all positive, however. The
decision to make some accounting changes relating to a two year spate
of acquisitions meant the group reported a pretax loss for the year of
$11.5 billion. It seems the dealmaking will cool off substantially as
the company now concentrates on getting more money out of its existing
subscriber base.
http://www.thestandard.com/article/0,1902,26735,00.html
ENTREPRENEUR SCHOOL: A number of leading European engineering and
business schools have banded together to create an international
association that aims to foster high-tech entrepreneurship. The
organization intends to help the creation of high-tech startups in
each of the member universities. It also plans to invite high-tech
companies to join the initiative. These companies could offer
training, research facilities and even financing for spinouts.
http://www.thestandard.com/article/0,1902,26696,00.html
GAME (ALMOST) OVER: Gameplay, the computer game developer, is hunting
for a buyer to save the business from collapse. It has already carried
out a firesale, selling its boxed games businesses in Scandinavia, the
UK and Spain, but more money is needed to get the remaining online
gaming business through to profitability. The news came as the group
revealed pretax losses for the six months to end January were $80
million from 14.8 million in the same period the previous year
http://www.thestandard.com/article/0,1902,26762,00.html
SHARE RAIDER: Eidos, the creator of Tomb Raider s Lara Croft, is
preparing to offer existing shareholders a batch of new shares at
below present market value in an attempt to raise $70 million. The
company s shares have dropped like a stone from last year s highs of
more than $17 (12 pounds) reached over a year ago because of delays to
the release of new game consoles such as Sony s PlayStation 2.
http://www.thestandard.com/article/0,1902,26737,00.html
CYRANO TROUBLE: French software company Cyrano will declare the
equivalent of Chapter 11 this week, putting it on the road toward
becoming the first high-profile casualty on the Nouveau Marche
exchange. The decision to request protection from its creditors comes
after steady losses and fruitless attempts to attract more financing.
Cyrano, which develops testing software, announced disappointing
results last week for the first half of its fiscal year, ending Dec.
31.
http://www.thestandard.com/article/0,1902,26739,00.html
BT YELLS AWAY: British Telecommunications has sold its Yell.com online
and print business-directory operation to a consortium of private
equity specialists for $3 billion. The sale is BT s latest move to
reduce its debts but the price was roughly $1.4 billion below what BT
was initially targeting. This is because of a recent regulatory ruling
capping the price that Yell can charge companies to advertise on its
Web site and in its printed directories.
http://www.thestandard.com/article/0,1902,26736,00.html
VIRGIN ABROAD: Sir Richard Branson, the swashbuckling chairman of the
Virgin Group, arrived in America last summer with grand plans to
revolutionize the US cell-phone market. Virgin Mobile, Britain's
fifth-largest wireless service, set up a beachhead in San Francisco,
and, ever marketing-minded, signed a $60 million contract with an
advertising firm before it had even lined up a telecom carrier to host
its offerings. Nearly a year later Virgin Mobile still hasn't found
one, though there is talk of a deal being hatched with Sprint.
http://www.thestandard.com/article/0,1902,24726,00.html
EU WAITS ON MICROSOFT: The EU commission's antitrust action against
Microsoft is likely to proceed only after the dust around the software
giant's U.S. case settles in the coming weeks. The EU's competition
director general says: "The U.S. is still hesitant to cooperate with
us in this situation." The EU commission opened its case against
Microsoft in August with a case based on Microsoft's attempts to
leverage its monopoly for PC software to the server software market.
http://www.thestandard.com/article/0,1902,24721,00.html
----------------------------------------------------------------------
BY THE NUMBERS
~~~~~~~~~~~~~~
Peter Hiscocks, director of the entrepreneurship center at Cambridge
University, notes that the number of MBA students interested in
starting their own companies has fallen from 30 percent last year to
only 2 percent this year.
----------------------------------------------------------------------
STAFF
~~~~~
Written by James Price. Send news tips and press releases to
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