Tough week for the telecoms. After profit warnings of Philips, ST Microelectronics, Nokia, the Nortel "bomb" with further 10.000 layoffs. The Telecom Valley worries.
A bomb in the already devastated telecom industry: on Friday June 15th, Nortel has announced a historical loss of 22 billion euros ($19.2 billion) for the second quarter 2001. The Canadian telecom giant, which had already announced to lay 20.000 occupations off, plans to go further and to cut 10.000 supplementary jobs off. Over six months, the manufacturer will thus loose one third of its staff. In Sophia Antipolis, where Nortel's building is composed of around 300 people, worry risks of course to increase. Hard to be safe when such a earthquake hits the world group.
Why such a big loss over one quarter for Nortel which generates an annual turnover of $30 billion ? Simply because this quarter has taken into account the stock exchange collapse of start-ups bought up by the group during the euphoria (more than $12 billion for this post). This situation is well explained in Le Monde by Laurence Girard. The article "Le canadien Nortel annonce des pertes et des licenciements sans précédent" explains how, in the race for the Eldorado of the new economy, Nortel has invested $20 billion when they bought up overrated start-ups. Moreover, the explosion of the speculative bomb has partly hit the other manufacturers which were competing. Lucent, which has already massively laid off (among which around one hundred people in the Alpes-Maritimes), Alcatel, Cisco, Ericsson and Siemens are suffering a lot as well.
Last week has been particularly armful for the telecommunications with a multiplication of profit warning. The Dutch Philips, the Franco-Italian manufacturer of semiconductors ST Microelectronics, the Finnish Nokia, the Swedish Ericsson, have all bring a negative feature to the market. A worrying situation for the Telecom Valley of the French Riviera where, microelectronics has already experienced a strong slowdown.