Hi-tech firms to shed more than 12,000 jobs

An American mobile phone maker and a European computer consultancy today announced plans to cut a combined total of 12,500 jobs.

Motorola, a chipmaker and the world's second largest mobile phone maker, said it will slash 7,000 more jobs to reduce costs. The restructuring is expected to cost about $3.5bn (£2.3bn).

Motorola said that the job cuts are part of a plan to reduce overall costs by more than a fifth. Since August last year, when the firm employed 150,000 people, it has cut almost a third of its workforce in response to the slowdown in the mobile phone market.

At the end of March, Motorola had 107,000 employees and had said that it was on course to reduce that number to 100,000 by the end of the year.

"The restructuring will be substantially completed when the steps we are announcing today are fully implemented," said Motorola president Ed Breen.

"This means our businesses will be sized to today's economic environment and our assets will reflect today's market values."

Motorola reaffirmed its profits forecasts for the second quarter and full year and said that it still expects to make a profit in the third and fourth quarters.

Meanwhile, Europe's largest computer consultancy, Cap Gemini Ernst & Young announced a further 5,500 job losses in its latest restructuring move. Cap Gemini, which gets a third of its revenues in the US, already shed 5,400 jobs, or 9%, of its workforce last year.

"Cap Gemini does not want to wait for a hypothetical market recovery," chief executive officer Paul Hermelin said.

Cap Gemini, which has 7,000 British employees, has been under pressure to further cut costs in response to a drop in demand for its services. Like its European and US peers, Cap Gemini has suffered as clients spend less on new computer systems and consulting services because of the global slowdown.

Cap Gemini, which has a global workforce of 55,000, will immediately cut 2,500 positions, mainly in telecoms and financial services. The cuts will be made in the US, Britain, Germany and Benelux. The measure would cost 140m euros but would save 225m euros this year.

One key change for Cap Gemini, which bought the consulting business of US firm Ernst & Young in February 2000, would be to separate its IT and consulting units. The restructuring announcement received a cool reaction from investors, who pushed Cap Gemini's shares down as much as 5%.