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
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Arts and Entertainment
The sight of a bucking bronco in the shape of a pink penis was too much for Hollywood actor and gay rights supporter Martin Sheen, prompting him to boycott a scene in the TV series Grace and Frankie
tv
Arts and Entertainment
Lena Headey as Cersei Lannister
TVSPOILER ALERT: It's all coming together as series returns to form
Sport
footballShirt then goes on sale on Gumtree
Voices
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvName confirmed for third series
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
art
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine