Global Crossing Inc., executives announced Friday a sweeping range of
cutbacks to shore up mounting losses and increasing debt.
The drawdown is expected to save the company hundreds of millions of
dollars, from $1.5 billion in 2001 to $900 million at the end of the
year. Capital expenditures will be slashed from $3.2 billion down to $200
million in its non-Asian operations (Global Crossing is a majority
shareholder of Asia Global Crossing, which is also experiencing financial
difficulties).
The company is cutting 1,600 jobs by the end of the month, in addition to
the 800 voluntary employee cuts already announced and selling off 71
offices executives consider outside their core business strategy.
Executives also agreed to take a pay cut to shore in costs, and a variety
of programs will be discontinued as the company looks for a way to escape
its Chapter 11 bankruptcy.
It's the latest round for an ever-devolving company that was once one of
the most powerful fiber optic "carrier's carrier" corporations on the
planet, with operations in the U.S., Asia and Europe.
The company is currently under investigation by the Securities and Exchange
Commission over concerns finance officials and its auditor, Arthur Andersen
(of Enron fame) were cooking
the books to mislead investors.
John Legere, Global Crossing chief executive officer, who gave himself an
immediate 30 percent pay cut, said the initiatives are the third phase in
the carrier's plan to get out of bankruptcy, and were long expected.
"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," he said.
Global Crossing has spent the past six months dumping non-essential
businesses from its portfolio, further reducing expenses and bringing cash
into the coffers. The latest, the sale of its trading system to Goldman,
Sachs & Co., netted the carrier $360 million.
Some experts think Global Crossing is getting ready for a sale, with rumors
abounding of a bid
by Gores Technology, a buyout and turnaround specialty
company. Hutchinson Whampoa has already put a bid of its own with the
bankruptcy court.
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