Weekly Digest
Weekly Digest Issue No. 441
13-11-2008
by Deirdre McArdle
BT to cut 10,000 jobs | Limerick still waiting for Dell to toll | Vodafone's Colao unveils cost cuts | Papermaster saga continues to unfold | All change at ChangingWorlds | Harvey Nash nets Alcatel-Lucent deal
BT to cut 10,000 jobs
Telecoms giant BT saw its share price rise by over 10 percent on Thursday morning as investors and analysts reacted positively to its stronger-than-expected second quarter results and news of job cuts. Britain's FTSE index also felt a positive knock-on effect from BT's performance, jumping 0.1 percent in early trading. BT posted a 4 percent rise in revenue to STG5.3 billion, while EBITDA dipped by 1 percent to STG1.4 billion. BT's Global Services area was the weak link in the firm's results, with EBITDA at the unit dropping by as much as 36 percent year-on-year. As it seeks to boost profitability, the telco announced it is to cut 10,000 jobs across its 160,000-strong workforce by the end of its fiscal year to March. BT said the job cuts will be primarily in the area of "indirect labour" including agency, contractors, subcontractors and offshore workers. BT provided ENN with a local comment on the job cuts when we asked if Irish workers would be affected by the news. "We've been changing the profile of our workforce on the island over the past number of years and will continue to grow in certain parts of the business while reducing numbers in other areas through natural attrition. We have no set plans to accelerate what is already business as usual for us," said a spokesperson. Reports indicate that any cuts in BT's direct workforce would occur in its UK operations. BT's operations in Ireland appear to going from strength to strength. Revenue for the group's all-Ireland operation for the first half of its fiscal year rose 5.4 percent to STG392.4 million, while EBITDA jumped 13.5 percent.
Limerick still waiting for Dell to toll
Though Dell has yet to make any announcement regarding the future of its Limerick facility, a number of developments with key Dell suppliers in Ireland haven't done a whole lot to quell rising concerns in the area, where the PC giant employs 3,000 people. Last Thursday, Banta Global Turnkey, which is based in Limerick, announced it is to shed 65 jobs. The loss of jobs at the Raheen-based firm has been linked to the growing uncertainty surround Dell's future in the area, as Banta is a major supplier to Dell. Then on Monday another Limerick-based firm, Flextronics, said it would be cutting 118 jobs before Christmas. Like Banta, Flextronics is heavily dependent on business from Dell. When ENN contacted Dell a spokesperson said there is no further update on any potential job cuts in Limerick, and that it was "business as usual". At the end of October the firm axed 400 temporary workers from its Limerick base but claimed there was "nothing unusual" in the layoffs, and that the move would have no impact on the future of Dell's full-time workers. Local TDs are now calling on the Tanaiste Mary Coughlan to seek a meeting with Dell chief Michael Dell to get clarification on the firm's plans. The Tanaiste's office had not replied to ENN's request for comment on the situation at time of publication.
Vodafone's Colao unveils cost cuts
With consumer spending slowing and the mobile market feeling the effects of the general downturn, analysts have been eagerly waiting to dissect the financial results of Vodafone, the world's largest mobile operator by revenue. Though Vodafone saw a 17 percent increase in first-half revenue to STG19.9 billion from the year-earlier period, net profit dropped 35 percent year-on-year to STG2.17 billion. The results were the first since CEO Arun Sarin left the operator and was replaced by tough-talking Vittorio Colao in July, who has said that the mobile giant would stop its expansion in emerging markets, and instead focus on cost control and improving performance. Colao has vowed to cut costs by STG1 billion by 2011, although he has not divulged any information on whether the cost-cutting programme would involve redundancies. Vodafone lowered its full-year revenue targets to between STG38.8 billion and STG39.7 billion. The group had already cut its revenue expectations in July to the bottom of a previous forecast range of STG39.9 billion to STG40.7 billion. Investors and analysts welcomed Vodafone's new focus, with Vodafone shares jumping 9.5 percent to STG1.186 in Tuesday trading.
Papermaster saga continues to unfold
The Mark Papermaster saga turned another page this week with a US federal judge ordering the former IBM executive to stop working at Apple. US Federal District Judge Kenneth Karas ordered Papermaster to "immediately cease" his employment with Apple last week. Karas also scheduled an 18 November status conference to "discuss, and encourage the parties to discuss beforehand, an expedited schedule for discovery and trial." While Papermaster maintains his move to Apple does not violate his non-compete contract with Big Blue because the companies are not rivals, IBM is worried that Papermaster could take his processor expertise from IBM and use it to design rival Apple chips. "The trade secrets and confidential know-how that Mr Papermaster has in his possession can be used for extensive and far-reaching applications in the field of consumer electronics," Rodney Adkins, IBM's senior VP for Systems and Technology, said in a court filing. IBM sued Papermaster to prevent him from taking the job at Apple that would see him head up the firm's iPod and iPhone development team. While Apple has yet to comment on the situation, it has deleted Papermaster's bio from its website. Presumably Apple has taken the information down while it waits for the court ruling on the matter. For now, the case is ongoing, so we'll have to wait and see what the next chapter holds.
All change at ChangingWorlds
The Irish mobile industry received a boost this week with the news that Irish mobile software firm ChangingWorlds was acquired by US technology firm Amdocs for a healthy USD60 million (EUR46.2 million) cash. Amdocs intends to combine ChangingWorlds' technology, which automatically builds subscriber profiles based on user behaviour and usage patterns, with its customer experience systems, which the US firm says helps service providers expand from being providers of utility voice, data and video services into "purveyors of the digital lifestyle". Founded in 1999 to commercialise the ClixSmart personalisation engine, which was developed as part of a research programme at University College Dublin, ChangingWorlds currently employs 145 people in offices in Dublin, Kuala Lumpur and San Francisco. A spokesperson for Amdocs told ENN that ChangingWorlds will now be incorporated into the US firm, and it appears that the Irish firm's staff will also be integrated into Amdocs. In an e-mail statement to ENN, Amdocs said: "A key driver of this deal was the knowledge and value that the 145 employees of ChangingWorlds bring to Amdocs. This is a growing market and the goal behind the acquisition is to accelerate revenue synergies and to incorporate ChangingWorlds technology into the Amdocs product suite." While the deal is good news for the Irish mobile sector in general, Trinity Venture Capital, a major shareholder in ChangingWorlds, also struck the jackpot. It will get up to USD16.4 million for its 28 percent stake, almost four times the return on its original investment.
Harvey Nash nets Alcatel-Lucent deal
Providing evidence that the IT outsourcing market is weathering the current financial storm, IT outsourcing and recruitment specialist Harvey Nash announced during the week that it had signed a two-year deal valued at EUR54 million with wireless communications giant Alcatel-Lucent. The deal will see Harvey Nash provide wireless technology research and development services to Alcatel-Lucent from a centre in Germany and an off-shore facility in Vietnam. "The low-cost, low-value work will be done in Vietnam, while the high-value development work will be conducted in the facility in Nuremberg," said Albert Ellis, CEO with Harvey Nash, speaking with ENN. Harvey Nash has a presence in Ireland as a result of its merger with Rescon IT in 2007. While work on the Alcatel-Lucent deal won't take place in Ireland, the agreement does signal some good news for the firm's Irish division. Harvey Nash Ireland is looking at expanding; it has a number of public sector contracts currently, including an agreement with the Justice Department, and Ellis believes the latest high-profile deal will have somewhat of a halo effect on the Irish firm, providing it with a certain amount of traction in the market. "This deal gives Harvey Nash in Ireland access to so much intellectual capital know-how and expertise and we believe it's going to allow us to open a lot of doors to potential clients in the Irish market in the near future," said Ellis. Go, Harvey, go!
Caped Koala Studios has built a virtual world for kids, combining education and social networking 