Motorola and Cap Gemini axe total of 10,000 workers

The telecoms and technology industries were dealt another dose of bad news yesterday as Motorola and Cap Gemini Ernst & Young cut almost 10,000 jobs between them.

The US mobile phone maker said it was cutting another 7,000 positions, or 7 per cent of its workforce, in a move that will cost it around $1.9bn (£1.2bn).

The blow came as the company unveiled an extra $1.6bn of charges, mainly to cover the fall in value of investments and assets, boosting total restructuring costs to $3.5bn.

In Europe, the computer consultancy Cap Gemini said it was cutting 2,500 more jobs in its latest round of restructuring to try to cope with a slump in demand.

The Paris-based company, which axed 5,400 jobs or 9 per cent of its workforce last year, said there would be just 250 fresh job losses in the UK, with most redundancies expected on the Continent and the US.

The moves come just a day after the telecoms and technology sectors were rocked to their core by the accounting bombshell dropped by the US telecoms carrier WorldCom.

Motorola, which had already trimmed its workforce back to around 100,000 from 150,000, said its restructuring signalled a return to the pre-dot.com era. "This comprehensive restructuring purposefully returns Motorola to approximately its mid-1990s size, the era prior to the excesses of the telecom and dot.com booms," said Christopher Galvin, Motorola's chairman and chief executive.

The fresh 7,000 job cuts, the company said, would fall across all its operations and would save it in the order of $100m this year and $700m a year going forward.

But Motorola sweetened the pill by reaffirming the financial guidance it gave earlier this month for the second quarter of the year. Sales for the three-month-period, it said, would "meet or slightly exceed" $6.4bn.

It also reaffirmed its guidance for the whole of 2002, saying it expected to show a profit in the third and fourth quarters as well as for the year, excluding special items. It predicts sales will fall between 5 per cent and 10 per cent this year.

David Devonshire, finance director, said the company had "substantial financial flexibility" and expected to end the second quarter of the year with around $6bn of cash.

The restructuring at Cap Gemini Ernst & Young, meanwhile, is part of the consultancy's ongoing battle to cut costs and raise operating margins. "Cap Gemini does not want to wait for a hypothetical market recovery. The goal is to create the most flexible structure," said Paul Hermelin, chief executive.

He expects the job cuts will lead to savings of 90m euros (£58m) this year and €230m in 2003. The company will try to find alternative positions for another 3,000 workers.

The new reduction in headcount is a part of an attempt to raise Cap Gemini's operating margin by between seven and eight points by 2004, Mr Hermelin said.

Cap Gemini, which was formed in February 2000 when Cap acquired the consulting business of Ernst & Young, has been under pressure to further slash costs to address the fall in demand for IT services. The company has also been criticised for not cutting back on staff as quickly as rivals such as Accenture.

The group dubbed its new profit drive "Leap", standing for "Leadership Expansion and Portfolio and Productivity Management". The new strategy will involve dividing the group's organisational structure in its three main markets – consulting, IT and outsourcing.

Mr Hermelin also repeated a previous forecast that revenue would stabilise from the second quarter. First-quarter sales fell 15.3 per cent to €1.87bn year-on-year.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border