Telecoms cut costs

Telecom Companies Cut Costs

Posted by Sam Churchill on December 8th, 2008

WiMax vendor Alvarion will cut 11 percent of its 1,000 employees by the end of this year in an effort to stay profitable throughout 2009 and weather the global economic slowdown, the company said today.

The company will also cut management salaries and introduce other cost saving initiatives, which altogether, are expected to result in annual cost of goods and operating expense savings of around $15 million. The changes will cost $3 million in a one-time charge in the fourth quarter, reports Unstrung.

Alvarion is clearly preparing for a worsening economic situation that will force operators to rethink their plans for wireless broadband rollouts.

“We see lengthening sales cycles, and we remain cautious about the potential effect of the economic climate on WiMax-related spending decisions as we move through next year,” said president and CEO Tzvika Friedman, in a press statement. Uncertainty for 2009 stems from a combination of new projects being delayed, existing customers slowing down deployments, and longer sales cycles. Greenfield WiMax deployments are particularly challenging because of the difficulty in raising funds, he explained.

Other related economic moves include:

• Nokia Siemens Networks is predicting a shrinking market but expects the “mobile infrastructure, fixed infrastructure and related services” market to be flat in 2008 compared with 2007. That means the total market is set to be worth about €115 billion ($149 billion) this year, roughly the same as in 2007 and 2006.
• Pali Research predicts that Sprint Nextel will sacrifice employees in order to save a drowning company. The report’s author said he expects Sprint Nextel to announce a slew of layoffs in January.
• Standard & Poor’s Ratings Services cut its long-term corporate credit rating on Motorola into junk territory, saying operational challenges at the company’s mobile devices unit will likely for some time. The downgrade comes as Motorola holds off on its plans to spinoff the ailing operations amid the current economic climate where stock prices have tumbled and credit is hard to come by.

With some of the United States’ largest and most diversified companies ready to spell out their 2009 financial forecasts over the next two weeks, Wall Street is braced for bad news. But Wall Street extended its rally into a second session Monday as investors grew optimistic that President-elect Barack Obama’s plan for a huge infrastructure spending package will help boost the crippled economy. The Dow Jones industrial average rose more than 250 points.

source : dailywireless.org