Kudelski sheds 110 jobs

André Kudelski's star has waned of late Keystone Archive

The Swiss digital broadcasting group, Kudelski, is to cut ten per cent of its workforce as part of a major cost-cutting offensive.

Shares in the former darling of the Swiss technology sector have fallen in value by 70 per cent this year alone.

Kudelski said the restructuring should lead to savings of SFr22 million ($15 million) to SFr27 million.

The job cuts follow a profit warning in August by Kudelski, one of the major players in access systems for digital satellite and cable television.

The company was hit earlier this year by a sharp slump in demand for its smart cards.

These cards give access to pay-TV, video and internet services. The decline in demand led to a half-year net loss of SFr17.9 million, versus a profit of SFr21.8 million in 2001.

Kudelski reduced its net target profit to between SFr5 million and SFr25 million on expected sales of up to SFr450 million.

With the economic outlook still bleak, the company has now decided to reduce its 1,200-strong workforce by ten per cent.

Weak market

Chief executive officer, André Kudelski, blamed the need to reduce the workforce on the weak digitial television market in Europe.

“The European digital television market is in crisis,” Kudelski told the Swiss Broadcasting Corporation, “while these same markets are faring well in the United States and Asia.”

“I hope that we will not have to cut any more jobs,” he added.

Kudelski concluded that sales during the end-of-year period would be crucial.

“The month of December is very important for us, and everything will be decided then.”

Falling shares

François Savary, an independent financial strategist, said Kudelski had suffered following the recent hi-tech industry downturn.

“From 1995 to 2000,” Savary told swissinfo, “the company had an absolutely phenomenal time on the stock market.”

“Then, after March 2000, it suffered from the explosion of the hi-tech bubble…and it is clear that until then, Kudelski had been overvalued, like all other hi-tech companies.”

Kudelski was once considered one of the stars of the Swiss technology sector, but its shares have fallen 70 per cent this year, and opened on Friday at SFr29.60, well below their 2000 peak of almost SFr270.

Slowdown in activity

Despite the share price fall, Savary offers an upbeat assessment of the future direction of the company.

“There has been a slowdown in activity in this particular sector, which those in charge of the company failed to anticipate,” Savary said.

“But that does not mean that the company’s strategy should be completely called into question.”

In other changes announced on Thursday, Kudelski also appointed a new chief financial officer, Mauro Saladini, a partner at McKinsey and Co. Saladini will replace Nicolas Goetschmann, who will take over financial responsibility at Kudelski’s Nagravision unit.

The new CFO, who will start work early next year, is expected to help the group implement its financial goals. CEO Kudelski said that the company’s current condition required strategic financial planning.

swissinfo with agencies

Key facts

Kudelski says it will shed 110 jobs – or ten per cent of its workforce – in a bid to reduce costs.
Chief executive officer, André Kudelski, blamed the need to reduce the workforce on the weak digitial television market in Europe.
Kudelski was once considered one of the stars of the Swiss technology sector, but its shares have fallen 70 per cent this year.