Despite our progress, the economy has become more challenging in recent months and we must continue to seek ways to manage our businesses even more productively.

Disney letter to employees

The cuts will come across all operating areas, including the company's corporate staff in Burbank, California, and would be accomplished by July, the company said.

The company employs 120,000 workers worldwide, with the greatest concentration - 55,000 - in Orlando, Florida.

Annual savings

Disney spokesman John Dreyer said the cuts would result in $350m to $400m in annual savings.

In a letter addressed to "fellow cast members" (Disney employees), company chairman Michael Eisner and president Robert Iger said the Disney had been working to contain costs and operate more efficiently.

"But despite our progress, the economy has become more challenging in recent months and we must continue to seek ways to manage our businesses even more productively," the letter said.

Since January, the company has laid off 535 workers from its Walt Disney Internet Group.

Internet failure

The company also said at that time it would eliminate its tracking stock for the Internet division after failing to make inroads into the portal marketplace, dominated by Yahoo and America Online.

The company chairman wrote to all employees

In a separate move, Walt Disney World, central Florida's largest employer, ordered a hiring freeze, only critical positions will be filled there.

The company's ABC Television network has struggled recently with a softening advertising market due to a general weakness in the economy.

Analysts have been concerned that declining consumer confidence would hurt attendance at the company's theme parks.