BT to shed 10,000 jobs by March

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Telecoms giant BT says it expects to have cut 10,000 jobs by the end of March next year to reduce costs.

The cuts will mainly affect agency and contract staff, including offshore workers, the company said.

BT said it had already cut 4,000 jobs, with a further 6,000 to go by March from its global workforce of 160,000.

News of the cost cuts sent BT shares 7.5% higher. The company said the job losses were not a "direct result" of the economic downturn.

"This is a reflection of the fact we have to become leaner," BT chief executive Ian Livingston told the BBC.

"We need to do it in good times and bad."

Many of the job losses will be in the UK, with about 4,000 staff positions affected.

Further cuts

BT was followed by three more UK companies who announced they planned to reduce their workforces.

It's a real blow especially at this time of year BT employee, South Yorkshire BT staff in a state of shock Send us your comments

Construction equipment-maker JCB announced a further 398 redundancies on top of the loss of 178 posts it revealed last month, after a fall in orders.

It blamed "the extreme deterioration" in business levels and confidence around the world.

Truck maker Leyland also spoke of a "severe decline" in demand which it said will result in the loss of 250 jobs.

Financial services firm Friends Provident will cut 280 posts, it said.

The announcements came a day after government figures showed unemployment in the UK had reached its highest level for 11 years.

Workers concerned

Mr Livingston said that he did not expect to make compulsory redundancies.

Workers nevertheless expressed concern at the announcement and said BT was keeping them in the dark.

"I think if the company are going to shed this many UK jobs then it should have informed the staff before we found out on the news," one employee in South Yorkshire told the BBC News website.

"The centre I am in is nearly all agency staff, so where do we stand?"

"It's a real blow especially at this time of year."

Investors upbeat

Figures released on Wednesday showed that the UK unemployment total reached an 11-year high of 1.82 million in the three months to September, as more firms cut jobs to cope with the economic slowdown.

BT's chief executive Ian Livingston says redundancies will not be compulsory.

However, BT's job losses, which will lead to lower costs, cheered investors.

BT shares were up 11%, or 12.5p, at 125p in afternoon trade on the London stock market.

"The group's marked intention to improve profitability could see another turn in investor sentiment, this time upwards," said Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers.

'Decisive action'

BT said that three of its four main business units were performing well, but said profits at its global services division "were simply not good enough".

"We are taking decisive action to put matters right," Mr Livingston said.

The firm said it had already replaced the head of the division.

The job losses come as the firm announced a 11% fall in pre-tax profit for the July to September quarter.

Pre-tax profits totalled £590m and the firm said revenue rose 4% to £5.3bn.

Last month, BT had warned that its global services division, which provides IT networks to multinational businesses, would report lower profits. Its shares fell nearly 20% on the news.

Pension

The company revealed that it hoped to save £100m in pension contributions each year when, next April, it brings in radical changes to its final salary scheme, announced earlier this week.

The changes will reduce pension entitlement for 65,000 members of the final salary scheme, which was closed to new joiners in 2001.

The scheme's normal retirement age will rise from 60 to 65, future pension entitlement will build up at a slower rate, the traditional link between final salaries and pension payments will be broken, and some members will have to pay higher contributions.

The changes are being brought in despite the fact that the BT scheme was still in surplus as of 30 September to the tune of £600m, based on the standard valuation method for company accounts known as IAS 19.

However, a BT spokesman pointed out that it was still paying in an extra £280m a year to pay off a deficit revealed by a previous actuarial valuation three years ago.

The next full actuarial valuation will be based on the state of the scheme as of 31 December and, depending on the assumptions used about longevity and future investment returns, may show that the scheme would be in deficit but for the impact of the cost-saving measures.

http://news.bbc.co.uk/1/hi/business/7726174.stm

Sun Micro to cut up to 6,000 jobs

The company's shares have fallen 77% this year

The computer hardware maker Sun Microsystems has announced it will shed up to 6,000 jobs in a bid to cut costs.

The move is part of a restructuring plan, which is set to save up to $800m (£540m) annually, and will cost up to $600m over the next year.

The cuts represent 18% of its workforce - the firm is facing slowing demand for its high-end computers.

Sun Microsystems warned in October it would report a wider-than-expected loss in the final quarter of the year.

Falling shares

"The magnitude of the work force reduction is certainly overdue," said analyst Brent Bracelin at Pacific Crest Securities.

The company's shares have fallen 77% this year. They are down 98% since 2000, when the internet bubble burst.

As most industries suffer from the global squeeze on credit and a consumer slowdown, so many technology firms are feeling the effects from a drop in demand.

Sun said it expected to report a net loss for the final three months of 2008 of 25-35 cents a share, surprising analysts who had expected the firm to post a net loss of 16 cents a share.

http://news.bbc.co.uk/1/hi/business/7730135.stm

RBS to cut 3,000 jobs worldwide

The bank has been hit hard by the global financial crisis

Royal Bank of Scotland (RBS) is to cut about 3,000 jobs in the next few weeks, the BBC has learned.

The positions will go in its global banking and markets workforce, spanning more than 50 countries. Jobs are likely to go in the City of London.

It is understood the bank's High Street operations, and those of subsidiary NatWest, will be unaffected.

RBS, which predicts its first annual loss this year, may get up to £20bn from the government's bail-out plan.

Paying the price

The bank employs about 170,000 people, of which roughly 100,000 are in the UK.

RBS declined to comment in detail on the job cuts. "We constantly review our operating model to make sure it is appropriate to the market condition, and take action accordingly."

"RBS is paying the price for lending far too much in the good times," says BBC business reporter Nick Cosgrove.

We constantly review our operating model to make sure it is appropriate to the market condition RBS History: Royal Bank of Scotland

"It had too much exposure to the sub-prime market in the United States and it overpaid for the giant Dutch bank ABN Amro at the height of the boom."

Sub-prime loans are those to people with poor credit records. An RBS consortium paid 71bn euros ($91bn; £61bn) for ABN Amro in October 2007.

Job cuts

The news of RBS's cuts comes within 24 hours of BT saying it will cut 10,000 posts by March next year.

Employment Minister Tony McNulty: 'It's difficult and is going to get more difficult'

Recent days have also seen Virgin Media, Yell, GlaxoSmithKline and JCB announce a total of more than 5,000 job cuts.

Official figures this week revealed UK unemployment in the three months to September was at an 11-year high of 1.82 million.

Meanwhile, Prime Minister Gordon Brown will join a meeting of 20 world leaders in Washington this weekend for a summit on the global economic downturn.

Losses mount

Earlier this month, RBS announced it expected to reveal its first full-year loss in its almost 300-year history.

The announcement followed a £691m loss in the first half of the financial year.

The bank also detailed plans to raise up to £15bn from investors by selling shares at 65.5p each. If the shares are not taken up, the government will acquire them.

The government will also directly buy preference shares in the bank - worth a total of £5bn.

http://news.bbc.co.uk/1/hi/business/7728596.stm

HP job losses

'UK workers bear brunt of global HP job losses': Unite

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EDS Blighty staff take it on the chin

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Posted in Enterprise, 13th November 2008 15:09 GMT

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Unite has hit out at Hewlett-Packard for making more job cuts in Britain - mostly among its EDS staff - than anywhere else in Europe.

The UK’s largest union said yesterday that HP’s decision to axe a quarter of its British staff following the takeover of the IT services firm in August was a mistake.

"This should be a merger for growth not a merger for cuts,” said Unite national officer Peter Skyte.

“HP in the UK is predominantly a services company and critically reliant on people for this. It is completely unacceptable that the UK is bearing the brunt of these global job loses.”

Unite also slammed the UK government’s employment rights and protection policies, arguing that its “light touch approach on regulation and employment legislation” benefited multinationals looking to cut jobs in the UK.

HP said in October it would axe 3,378 jobs in the UK - 90 per cent of them are understood to be EDS staff.

It plans to trim its global workforce by 25,000 - more than seven per cent - over the next two years.

Unite, alongside other European unions, plans to fight the job cuts, even though many of them are not recognised by HP.

A “European day of action” is taking place today with events in the UK, Austria, Belgium, Italy, Spain, France and Germany. ®

http://www.channelregister.co.uk/2008/11/13/hp_eds_job_cuts_unite/

RBS: historic loss

• Robert Peston
• 4 Nov 08, 09:40 AM

Stephen Hester has today signalled that Royal Bank of Scotland will make a loss this year.

In an interview with me for the Today Programme, the new chief executive of the battered bank said that "people may conclude that profits will be difficult to achieve" for 2008 and that it "wouldn't surprise" him if analysts forecast a loss.

And although we've become inured over the past few months to the world's biggest banks announcing losses, it's still momentous that RBS is heading for the first full-year loss in its history.

After all, RBS owns NatWest. It's supposed to be solid and dull, concentrating on providing very basic banking services to millions of individuals and businesses.

Banks like RBS aren't supposed to make losses, ever.

So where did it all go wrong?

Well Hester puts the blame squarely on "leverage", on the RBS's decision to lend far too much in the boom years.

It became far too exposed, though its investments, to those disastrous subprime loans to US homeowners with poor credit histories.

RBS increased this exposure through its imprudent, top-of-market takeover of a huge chunk of the giant Dutch bank, ABN.

But, perhaps as damningly, it provided excessive loans of a more mainstream sort to businesses and households that are beginning to have difficulty keeping up the payments.

So RBS - like HBOS - has just survived one set of multi-billion pound losses on the subprime phase of the credit crunch. And it's now being tested by rising impairment charges on more conventional lending, because the recession into which we're careering is making life tough for those with big debts.

That's why Hester was parachuted in as new chief executive. That's why RBS has gone cap in hand to the Treasury for £20bn of new capital from taxpayers.

Hester is determined to fix the bank, and fast. There will be job losses, he told me. Assets will be sold.

And he's desperate to redeem the £5bn of preference shares he's selling to the taxpayers as quickly as possible, so that he'll regain the freedom to pay dividends as and when he likes to shareholders.

He said that he would be "disappointed" if he couldn't pay dividends in 2010.

Strikingly, he didn't sound like an executive who feels that his room for manoeuvre is being excessively constrained by the supposedly stultifying interference of the Treasury.

He does, for example, believe that he can make increased credit available for small businesses and house purchase, as the Treasury wishes - although he's not promising that the credit will be cheap.

Here's the odd thing. Although it's profoundly humiliating for RBS that it's heading for a loss, in a way that's history - the inevitable consequence of previous mistakes.

RBS's darkest hour was a few weeks ago, in late September and early October, when the entire banking system was close to total paralysis.

As Hester conceded, a number of big banks suffered a flight of vital funds that took them to the brink of collapse.

RBS - and others - have been bailed out by taxpayers, to the tune of £5,000bn in support provided by governments across the world.

Without that support, Hester would now be - in essence - a financial undertaker, rather than a chief executive determined to restore strength and resilience to a pillar of the British economy.

http://www.bbc.co.uk/blogs/thereporters/robertpeston/