Global Crossing restructure cuts 600 jobs

Telecommunications network supplier Global Crossing is cutting its workforce by 600 workers, or about 15% of its global...

Telecommunications network supplier Global Crossing is cutting its workforce by 600 workers, or about 15% of its global employees, in a cost-saving restructuring move.

The company said it is streamlining its operations to aim directly at enterprise customers with higher-margin global IP and managed services needs, while de-emphasising lower-margin legacy services.

"We are focusing our efforts on areas of our business that offer long-term growth and viability, and those in which Global Crossing will maintain a lasting differentiated position," chief executive offier John Legere said.

"As we move forward, we will invest selectively in these strategic products and services, while devoting fewer resources to, or exiting, unprofitable parts of our business. Through these efforts, we have a great opportunity to enhance our global IP service offerings and deliver even better service to customers, while providing significant ongoing value to shareholders."

The company said it will incur costs of $12m-$14m (£6.7m-£7.8m) for severance payments, as well as savings of $4m-$5m from consolidating unnecessary offices. Savings of $41m-$47m per year are expected from the employee and real estate cuts.

Also scheduled are the outsourcing of some business processes, which were notidentified.

Last week the company announced its delayed first- and second-quarter financial results.

Revenue for the first quarter of 2004 was $690m, compared to revenue for the same quarter in 2003 of $735m. The first-quarter loss was $113m, compared with $97m one year earlier.

Revenue for the second quarter of 2004 was $648m, compared with $744m one year earlier. The second-quarter loss was $112m, compared with a loss of $27m one year earlier.

"Notwithstanding the difficult competitive environment evidenced by declining revenues industrywide, we have continued to make progress, and our first-half results are generally in line with our expectations," Legere said.

"We continue to develop new products and services that leverage our unique global IP footprint, operate our network at the highest levels of quality performance, and customer satisfaction measures have shown steady increases. We are ready for growth."

The moves come less than a year after Global Crossing emerged from Chapter 11 bankruptcy last December. In August 2002, a majority stake in the company was bought by two Asian companies, Hutchison Telecommunications, a subsidiary of Hutchison Whampoa, a Hong Kong conglomerate, and Singapore Technologies Telemedia.

Todd R Weiss writes for Computerworld

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