Pantech scrambles after bad earnings

Pantech Co., the country’s No. 3 manufacturer of mobile handsets, embarked on a large-scale restructuring following a series of bad earnings lately. The company said yesterday it began accepting applications for voluntary retirement from all 3,500 of its employees this month. It also merged 11 departments and 41 sub-divisions into three departments and 29 sub-divisions. Pantech plans to allow voluntary resignations by up to 600 employees, about 17 percent of its total workforce. The handset manufacturer has also decided to redesign its export strategy, giving up markets in Europe, Russia and China, where it has a lower competitive edge, and instead focus on three key regions ― North America, Latin America and Japan. “Critics have pointed out that employees with overlapping duties, caused in the course of acquiring Hyundai Curitel and SK Teletech, have hurt our competitiveness,” said a Pantech executive. The intensive restructuring comes only about three months after Korea’s fourth-largest cell phone producer, VK, filed for bankruptcy. Smaller Korean handset makers have faced heavy financial turmoil as the world’s two top producers, Nokia and Motorola, ramped up low-priced phone production and steamrolled smaller firms. Last year Pantech lost 102.1 billion won ($107 million). That downturn was followed by a net loss of 40 billion won in the first half of 2006. Analysts predict that third-quarter earnings for Pantech, scheduled to be released in early November, will be lower than market expectations. The firm has spent more than 200 billion won to reorganize its distribution network since 2004 as a way of ditching its previous role as a handset supplier and fostering the brand as an independent handset maker. Pantech made an aggressive move last year to increase its competitive stance, taking over SK Teletech, owner of the premium handset brand SKY, for 300 billion won. by Seo Ji-eun