ZetaTalk says that this year will see that: Economic impacts are beginning to bump into each other, one causing the other, so that the economic result is beyond a recession and threatening to become a worldwide depression. I wonder what the ripple effect of sacking 20,000 people, cutting expenses by $2B and reducing capital spending by $750M will be? And this is not an isolated event, far from it actually, businesses are failing all around the world this year and are all slashing their expenses and spending budgets. All driving down-stream effects. Anyway, here's the latest story.
Lucent loses $3B
By John Rendleman, InformationWeek
Wednesday, 25 July 2001
The tough times aren't over for Lucent Technologies, which has reported a US$3.25 billion third-quarter loss and announced a plan to lay off as many as 20,000 more workers. Lucent blamed the loss on lower revenues across all of its product lines, a reduction in sales of high-margin software, and the loss of several contracts here and abroad. "Lucent's hit some pretty tough times," said Tracey Vanik, technical director at market research firm RHK. Two things that may turn the tide in Lucent's favour, however, if and when the economy picks up. They are its strengths in optical networking technologies and its focus since last year on networking equipment based on IP technologies - the protocol that will be at the heart of almost all new data networks, Vanik said.
The US$3.25 billion loss for Lucent's third fiscal quarter, ended June 30, amounts to a loss of 95 cents a share, and compares with a US$301 million loss, or 9 cents a share, in the same quarter last year. Lucent's revenues for the quarter were US$5.82 billion, a 21 percent decline from the US$7.41 billion in revenues it earned in the same quarter a year ago. After a previous round of cost-cutting measures that already resulted in 19,000 job cuts this year, the company is planning the second phase of its restructuring that will eliminate 15,000 to 20,000 more jobs, said top Lucent executives. Other cost-cutting plans include a US$2 billion reduction in its annual operating expenses, a US$1 billion improvement in working capital performance, and a US$750 million reduction in its capital spending, according to the executives. The second-round of spending cuts are intended to return Lucent to profitability sometime next year and will result in a US$7 billion to US$9 billion one-time charge the company will take in the fourth quarter of t=
his year, the executives said.
Lucent also said it has sold its Optical Fiber Solutions unit for US$2.225 billion to Furukawa Electric of Tokyo and Corning. Furukawa will pay US$2.25 billion for its share in the optical fiber business; Corning will pay US$225 million.
By Jonathan Weber, The Standard, July, 2001
Last year's economic optimists turned out to be wrong, but the bad news is that the hoped-for second-half recovery now seems to be out of the question.
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