Lucent said it will cut 16,000 jobs worldwide in a bid to reduce annual costs by $2bn, and may announce further cuts later in the year.

The networking equipment giant, which had a headcount of 125,000 in October 2000, said revenue for its first fiscal quarter of 2001 saw a 28 per cent fall to $5.84bn and that it would make a net loss of $395m.

Henry Schatt, chairman and chief executive at Lucent, said a seven-point plan had been drawn up that would "rebuild the company for long-term, sustainable profitability".

Some 1000 staff in the company's Europe, Middle East and Africa division will be axed, 7500 will go in the US and 1500 elsewhere. The axe will fall on marketing, sales and corporate centres, and will result in the closure of some manufacturing plants.

It added that a further 6000 manufacturing staff would be replaced during 2001 through the increased use of contractors, mostly in the US.