Marconi slashes another 4000 jobs

After leaving London investors hanging by suspending trading in its stock Wednesday, Marconi announced 4000 more layoffs and drastically reduced its profit forecast for its fiscal year ending March 31, 2002.

The latest job cuts, which include 1000 management positions, come on top of an April reduction of 3,000 workers. Since that first round of layoffs was announced, about 4000 Marconi employees have left or agreed to leave the company. Marconi expects to reduce headcout by a total of 10,000 as it transfers other employees to the payrolls of its outsourcing partners.

In a statement, the company said it needed to accelerate its cost-cutting plan because market conditions during June were worse than expected.

“While customers continue to show operational interest in solutions and continue to request information, in recent weeks it has become clear that financial constraints in the service providers, particularly in Europe, are now causing that interest to not convert into firm orders at the usual rate,” the Marconi statement said.

During a conference call yesterday, Marconi interim CEO Lord Simpson expressed hope for the company’s long-term outlook.

“This is the finance director turning off the tap,” he said. “[It’s] a deferral and not a long-term famine, as traffic rates in our major customers continue to rise.”

After recalibrating its internal forecast for the year, Marconi’s board of directors said the company’s sales will be 15% lower than last year and operating profit before exceptional items will be down about 50%. Those figures exclude results from Marconi’s Medical Systems division, which was sold yesterday to Royal Philips Electronics for $1.1 billion in cash.

While Marconi expects to be break even at the operating profit level in the first half of the fiscal year, it said second-half profits will be stronger due to the impact of cost reductions. As a result of the latest cuts, the company expects to save about $210 million on an annualized basis and $105 million this fiscal year. Total savings, including saving from the previous work-force reduction, will be $490 million annually and $280 million this fiscal year.

The additional restructuring and layoffs will result in a $210 million charge to earnings. Total one-time charges related to restructuring for the fiscal year will reach about $770 million, according to Marconi.

Marconi’s shares resumed trading this morning. The company’s American Depository Receipts, traded on Nasdaq, fell 52.35% to $3.68 per share in afternoon trading.