Alcatel to close plants

June 27, 2001 Posted: 0830 GMT

LONDON (CNN) -- Europe's fourth-largest telecoms equipment maker Alcatel plans to sell most of its factories within 18 months, a report said on Wednesday.

Alcatel Chief Executive Serge Tchuruk said in an interview with The Wall Street Journal  that he aims to cut back to a dozen or fewer plants compared with about 120 it had last year.

He declined to specify how many of the company's 110,000 workers could be laid off or transferred or how much money the sales would bring.

The French company and its rivals worldwide are in the midst of cost-cutting drives to weather the storm in the tech and telecoms sectors caused by the slowdown in the U.S. economy.

Alcatel first unveiled the outlines of its ongoing restructuring plan last month after the collapse of talks about a $23.5 billion merger with Lucent Technologies (LU: Research, Estimates) of the U.S.

At the time Alcatel forecast a 3 billion ($2.6 billion) net loss for its current quarter and said it was speeding up asset sales to focus on its core telecom-carrier equipment business.

Many of Alcatel's factories, or "fabs" as they are known in the industry, will be sold to contract manufacturers, but some  will continue to produce products for Alcatel, said Tchuruk. "We are going to be a fab-less company pretty soon," Tchuruk told the WSJ.

Tchuruk said Alcatel is negotiating plans for staffing cuts with its employees. But lay-offs will provoke labour problems in France, where such moves are highly controversial, the report said.

Asked whether the company was still seeking acquisitions, the Alcatel CEO told the newspaper its strategy was "opportunistic," but that "today the focus is mind your business and grow your business."

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