Alcatel Layoffs

wjiang (wjiang)
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DALLAS (Reuters) - French telecommunications equipment maker
Alcatel said on Monday it plans to cut about 1,100 U.S. employees, or
just under 5 percent of the jobs in the company's largest market, citing
slowing customer demand.

Paris-based Alcatel (CGEP.PA) (NYSE:ALA - news), which employs
more than 130,000 staff worldwide, warned earlier in March that it was
suffering from soft handset sales in Europe, but has stood by earnings
forecasts for the first quarter and full year.

It said 800 of the 1,100 positions affected are full-time jobs. Employees affected by the
across-the-board cutback will receive a severance package and outplacement services, the company
said in a statement.

``It is important, during these tough economic times in the U.S., for us to manage down our cost
structure better than ever before,'' said Mike Quigley, president of Alcatel Americas.

``These types of employee-impacting decisions are very difficult to make, but they are essential given
the current U.S. business environment,'' he said.

``Due to the U.S. economic slowdown and resulting reduced customer spending, Alcatel is increasing
its cost management initiatives to remain competitive in the States,'' the company said in a statement
released after the close of regular-session trading of the French company's New York Stock Exchange
(news - web sites)-listed American Depositary Receipts.

Brian Murphy, a U.S.-based Alcatel spokesman, said more than half of the cuts will come at its Plano,
Texas facilities, the site of the company's Americas headquarters, as well as fiber-optic and traditional
phone equipment production.

Alcatel also plans to cut 132 of the 1,500 jobs at its Raleigh, North Carolina plant, which focuses on
broadband and optical equipment for high-speed data networks. In Chantilly, Va., a sales and
technical support center, will cut 96 of its roughly 500 employees, he said. Alcatel's Petaluma, Calif.,
facility, which focuses on the company's DSL Lightspan product that provides fiber optic links into
local neighborhoods, will trim 93 of 500 jobs, Murphy said. Field personnel in other locations make up
the balance, he said.

``These cuts are being made across the board. They involve all businesses and functions and locations
and levels,'' Murphy said. He declined to comment on the performance of specific business units.

Last week, several major brokerages cut their ratings on Alcatel shares to neutral, citing concern over
mounting weakness in markets for traditional circuit-switched telephone network equipment, submarine
cables and mobile phones.

Alcatel is the world's second largest maker of optical network systems and components after Canada's
Nortel Networks Corp. (NYSE:NT - news). It also supplies undersea cable network equipment, as
well as a range of land-based and wireless phone systems.

Ahead of the warning, shares of Alcatel ended slightly higher in U.S. trading at $29, a gain of 24 cents.
But the U.S.-listed shares of Alcatel Optronics, its fiber components business, had tumbled 10 percent
to $24-1/2, on the Nasdaq stock market.

Earlier, Alcatel's Class A shares fell 1.46 percent in Paris trading to close at 33.75 euros. Alcatel's ``O
Class'' shares, which cover its optronics business, fell 3.8 percent to 30 euros, also in Paris activity.

There were no after-hours trades reported in Alcatel's U.S. listed shares following the job cut
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2001-4-3 -04:00
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