Posts filed under ‘Job Cuts’
PCCW’s minority shareholders yesterday approved a proposal to take the Hong Kong-based telco private, but the securities regulator will launch an investigation following allegations of vote-buying, reports Bloomberg. PCCW’s largest shareholder, chairman Richard Li, and major stakeholder China Netcom (part of China Unicom) offered HKD15.9 billion (USD2.05 billion), or HKD4.50 per share, for the remaining 52% of PCCW, and the offer was supported by more than 75% of stockholders. The deal requires High Court approval before the shares are delisted, and a hearing is set for 24 February. The Securities & Futures Commission immediately took possession of the voting records and will start investigating the buyout process, following allegations that insurance agents were offered stock in return for supporting the proposal. PCCW said it has ‘no knowledge of any improper share transfers.’ PCCW’s shares have lost 97% of their value since Li took control of the former Cable & Wireless HKT in 2000. The company has a market capitalisation of USD3.6 billion based on yesterday’s share price. The fixed line, broadband, mobile and TV operator saw its first-half net profits slump by 20% last year.
In other news PCCW yesterday confirmed that it plans to implement measures to cut its costs by up to 30%, including redundancies, but declined to divulge the potential number of jobs that will be lost. Union staff had earlier alleged that the group planned to lay off 600 employees, or around 5% of its workforce. PCCW has increased its staff total by 40% to 17,000 in the last four years.
The loss-making US cellular operator Sprint Nextel has announced that it will cut its workforce by 13% as it streamlines its operations in an attempt to make annual cost savings of USD1.2 billion. The job cuts will be across all levels of the workforce and are expected to be carried out by end-March. The latest redundancies come on the back of 4,000 job cuts made last year. ‘Labour reductions are always the most difficult action to take, but many companies are finding it necessary in this environment,’ said Sprint CEO Dan Hesse. Last month rival operator AT&T announced that it was axing 12,000 jobs – 4% of its workforce – in an effort to cut costs.
Ericsson has reported that its net income for the fourth quarter fell by 31% due to restructuring costs and lower profit margins – and announced plans for a further 5,000 job cuts. Net income in the three months to Dec. 31 was SEK3.89 billion (US$460.8 million), down from SEK5.64 billion (US$671 million) in the year-earlier period. Sales in the quarter increased by 23% year-over-year and by 11% for the full year.In the quarter, gross margin was 35.2%, excluding restructuring charges. Full year gross margin amounted to 36.8%, compared to 39.3% a year ago. The sequential decline was mainly due to a high proportion of network rollout services. The network rollout sales increased sequentially by 61%.
We have had a solid performance in 2008,” said Carl-Henric Svanberg, President and CEO of Ericsson. “Sales grew by 11% with good demand for our entire portfolio and across the world. Changes in currency rates had very small effect on full year growth. Professional services have continued to show strong growth. Operating margins, excluding Sony Ericsson, have steadily improved, and our financial position is strong with net cash of SEK 35 b. Sony Ericsson is affected by the economic downturn and the declining demand in the consumer market and has taken necessary actions.
Motorola and Sony Ericsson, two of the world’s most well-known phone manufacturers, signalled more evidence of their plight last week with a raft of further cost cutting. Motorola is set to cut 4,000 jobs in addition to the 3,000 it announced in 2008, in a bid to reduce costs. The majority of cuts will come from its mobile devices division to save $700m (£481m) in 2009, in addition to the $800m (£550) it said it would save in 2009 from its restructure last year.
Motorola will now focus almost completely on phones based on the Android operating system, rather than Windows Mobile. It is also scaling back the number of new handsets it will produce.Last week, Sony Ericsson announced results that were worse than many analysts had expected, posting a £6.9m loss in 2008.
Motorola has announced plans to cut another 4,000 jobs, mainly at its mobile phone business, where sales continue to drop. The company reported preliminary fourth-quarter results showing phone shipments of 19 million units, down from 25.4 million in Q3 due to weak consumer demand and customer inventory reductions. Around 3,000 jobs will go at the Mobile Devices division, with the remainder at corporate functions and other business units. The staff reduction comes on top of the 3,000 job cuts announced late last year. The current cuts, additional cost-reduction efforts and the measures announced in Q4 are expected to lead to annual cost savings of USD 1.5 billion in 2009, of which USD 1.2 billion at Mobile Devices. Motorola said its Enterprise Mobility Solutions and Home and Networks Mobility businesses continued to perform well in Q4, in a “challenging environment”. Total sales for Q4 are estimated at USD 7.0-7.2 billion, while the net loss will reach USD 0.07-0.08 per share, including 6 cents in charges for restructuring and writing down the Clearwire stake and start-up investments. The company noted that it is still assessing impairment tests for the quarter, which could result in a bigger loss, and the figure dos not include charges for the above restructuring measures. Motorola finished the year with cash of USD 7.4 billion. Full quarterly results will be released on 3 February.
Caribbean and Central American mobile operator Digicel has rolled out a “voluntary separation program” aimed at reducing staff in 23 markets. Workers who decide to leave will be eligible for health care coverage, bonuses and accelerated payments for stock options under the plan, depending on years of service. The operator estimates that about 10 percent of 4,500 eligible employees will take the offer. Digicel hopes the programme will “better align” the organization and overall cost structure with evolving economic conditions. The staff reduction programme will not affect the newly-entered markets, including Panama, Honduras, the British Virgin Islands and the South Pacific operations. Digicel currently operates on 31 markets across the Caribbean, Central America and the Pacific islands, with a total customer base of over 6.5 million subscribers.
More than 200 people Motorola India had hired just a few months ago to drive hard its mobile handsets sales have all been laid off. The company has decided to carry on with its current model of doing business through its distributors.
As for the rationale behind this decision, Motorola India, through an email response sent via its public relations agency, said “while Motorola has a strong global brand as well as a solid balance sheet and cash position, the company is not immune to the currently weak global economy.”
On the lay-offs, the company further said “Motorola continuously reviews its business and the market to ensure that our resources are aligned with market conditions.”
Industry sources said Motorola paid all the laid-off sales personnel two months salary in lieu of notice period. Motorola would have made an announcement if it were laying-off employees in its home market, the US, as a matter of routine, but preferred to give the pink slips to such a large number of employees without making any noise.
Motorola, which was third in terms of market share, has fallen behind Samsung. Nokia is the leader far ahead of other mobile handsets makers with around 60 per cent market share. All others have their market share in single digits. Sony Ericsson has about 8 per cent market share, Samsung 7 per cent and Motorola 6 per cent.
Motorola India said “we are working diligently to improve the profitability of our business and are committed to delivering a strong portfolio of exciting new products in 2009 and beyond.”