Threat to 160 Irish tech jobs
WorldCom, the bankrupt telecoms firm that employs 160 staff in the Republic, will shed 2,000 jobs in the Europe, Middle East and Africa region as part of a cost-cutting plan, it said yesterday.
The US-based company, which filed the world's largest bankruptcy in July, will also reduce spending on infrastructure by about $50 million (€51.4 million) and drop unprofitable niche products in a bid to reach a cash-flow-positive position in 2003.
Job losses among WorldCom's 160 Irish staff are inevitable due to the scale of the planned redundancies in the European region, which will reduce staff by about a quarter to just 6,000.
However, in an interview with The Irish Times yesterday, Ms Lucy Woods, WorldCom's European senior vice-president, said the cuts here might not be as big as in other territories.
The bulk of the 2,000 job cuts are expected to be in Britain, France and Germany.
Ms Woods said WorldCom would take a restructuring charge amounting to tens of millions of dollars because of the redundancies. She said negotiations would begin shortly.
WorldCom has offices in Dublin, Cork, Limerick and Galway, and a €40 million internet data centre in Clonshaugh, which opened a year ago.
Even before the US parent declared bankruptcy following a $7 billion accounting scandal, WorldCom had announced a redundancy scheme in July, which cut 20 jobs in the Republic. This process was concluded last week and involved the relocation of certain customer-support functions from its Dublin office to Britain.
Ms Woods said the firm was making the cuts to become cash-flow positive in 2003, one year ahead of previous plans. The new plan reflected how the telecoms market had changed with companies valued on their ability to raise cash rather than generate revenue.
She said the Chapter 11 bankruptcy filing by WorldCom in the US had also put pressure on its subsidiaries to become cash-flow positive. But she said the European firm was not up for sale.
WorldCom's European division, headquartered in Reading, England, operates in 25 countries across Europe, the Middle East, and Africa, and provides voice, data and internet services to business customers. It generates $2.5-$3 billion revenues every year for WorldCom - however, it is not yet generating cash.
Parent company WorldCom Inc, one of the biggest global telecoms firms, succumbed to bankruptcy after disclosing that $3.85 billion in expenses were improperly booked, inflating its profits. In August it admitted finding another $3.8 billion in accounting errors.
Ms Woods said the investigations into WorldCom's accounting practices had found no evidence of improper accounting in Europe.