Global Crossing Cutting Costs
Global Crossing Ltd. announced a series of cost-cutting measures Friday, aimed at lifting the struggling telecommunications network operator out of bankruptcy.
Fridays announced moves include voluntary pay cuts for some executives, an additional round of 1,600 layoffs of mostly administrative and sales positions -- on top of 800 previously announced job cuts to take effect on Friday the closure of 71 offices for $150 million in real estate savings, cost-cutting measures via automation and streamlining of business processes, the potential sale of "non-core" businesses, and reductions in service offerings.
None of these measures will affect Asia Global Crossing, company officials said.
The total savings should reduce Global Crossings operating expenses from $1.5 billion in 2001 to approximately $900 million this year, according to officials. Capital expenditures for non-Asian operations are being reduced from $3.2 billion in 2001 to $200 million in 2002.
Global Crossing had filed for Chapter-11 bankruptcy protection in January of this year.
"Not only are we committed to delivering a healthy balance sheet, we are on a clear path to becoming the worlds most cost efficient and globally competitive data communications service provider," said Global Crossing CEO John Legere in a prepared statement. "We have the network, technology and customer base in place -- and now we will develop an athletic organization to leverage our existing strengths. At the end of the restructuring process, we will emerge a lean, tightly integrated organization with world-class productivity and an ability to quickly scale up as demand increases."
Legere said it was with "deep regret" that Global Crossing ordered additional reductions in staff. To demonstrate his commitment to turning the company around, he said he would be taking a 30 percent reduction in salary, effective immediately. Global Crossings workforce will shrink from 15,000 at the beginning of 2001 to fewer than 6,000 by the end of this month, company officials said.
Several Global Crossing executives, the company announced, have been reassigned or have taken on additional duties.
As for asset sales, Global Crossing said it is considering selling off its conferencing division and its national network in the United Kingdom, which are describes as "non-core" assets. Previously Global Crossing sold off its IPC Trading Systems to a Goldman Sachs Affiliate for $360 million. Global Crossing has also been seeking a buyer for its Global Marine Systems division, which lays fiber optic cable via submarine.
As for potential reductions in service offerings, a Global Crossing spokesperson said the company would be phasing out its customized managed network solutions, and focusing instead on the core business of intercity voice and data services.