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UTStarcom job cuts going smoothly
21/6/2005 17:26

Jane Chen /Shanghai Daily news

The job-reduction program of Nasdaq-listed UTStarcom Inc. is going smoothly because of the favorable compensation packages being offered, reported today's Oriental Morning Post, quoting sources close to the firm.
The company started the job cuts May 17, shortly after it announced on May 6 a plan to slash its global labor force by 17 percent, or 1,400 employees. In China, 800 staff will be affected.
When contacted by Oriental Morning Post yesterday, UTStarcom's president Wu Ying declined to disclose the details of the job cuts, only saying the company is now engaged in the business of restructuring and making strategic changes.
Citing close sources to the company, the report said most of the Chinese staff involved will be with the money-losing businesses such as the Internet access unit, Internet Protocol section and administrative departments. Little Smart, 3G, Internet Protocol TV and businesses related to the telecommunications operations are not affected.
The global job cut is estimated to cost between US$20 and 25 million, mostly for compensations to staff. An ordinary engineer with over three years' work experience with UTStarcom's China branch will receive compensation of between 60,000 yuan and 100,000 yuan, UTStarcom staff revealed to Oriental Morning Post.
This offering, nearly the highest by telecom companies in China, is said to be satisfactory.
Industry analysts blame the profit decline on the poor performance of its core business Little Smart, a cordless phone service, for UTStarcom's global job cuts and expect the company to shift its focus to 3G and IPTV.
UTStarcom has been losing its dominance of China's Little Smart market with its market share plunging to 53 percent last August from 71 percent the year before. Its share slumped to 42 percent in December 2004 when its key rivals, Shenzhen Huawei Technologies Ltd and ZTE Corp. saw their shares grow to around 20 percent and 10 percent respectively.