Warning sends Alcatel crashing 25%

The French telecoms equipment maker Alcatel unleashed a profit warning on bruised technology investors yesterday, sending its shares crashing more than 25 per cent to record lows.

The company said it expected the second quarter to be flat compared with the first, while operating profit should improve, as forecast, by about €100m (£65m). A new cost-cutting plan will lead to a charge of €1.2bn (£0.8bn) this year.

The chief financial officer, Jean-Pascal Beaufret, said Alcatel was heading for an operating loss this year, stoking fears that a long-awaited pick-up in orders is some way off.

As recently as April, Alcatel, one of the world's top three equipment suppliers, was still forecasting an operating profit in 2002, hoping that a massive restructuring involving 30,000 job cuts this year and last would lower its break-even point.

Alcatel, and rivals such as Lucent, Ericsson and Nortel Networks, are suffering a gruelling decline in orders.

Analysts speculated Alcatel could axe another 10,000 jobs globally if it is to meet targets of cutting fixed costs by 12 per cent. An Alcatel spokeswoman declined to comment on the figures.

"We are going to spend three months looking at where and how we can save money and for the time being we are not giving any figures in terms of job cuts," she said.