Alcatel-Lucent announces 1,000 job cuts
Alcatel-Lucent is cutting 1,000 white-collar jobs as part of its new chief’s plan to return the company to profitability, but shares slumped as investors were hoping for a bolder shift in business strategy.
The Paris-based maker of networking equipment for fixed and mobile telecommunications operators also intends to get rid of half of the 10,000 contractors it employs in measures aimed at saving euro750 million ($991 million) by the fourth quarter of 2009, the company said in a statement.
In a statement, Alcatel-Lucent said the cuts could help it break even at the operating level next year. It hasn’t made a profit since the company was formed through Alcatel SA’s purchase of Murray Hill, New Jersey-based Lucent Technologies Inc. for $11.4 billion in 2006.
CEO Ben Verwaayen, who took over in September following the removal of Patricia Russo, said the cuts would make Alcatel-Lucent a “more agile” company by stripping out layers of management.
Verwaayen, who is credited with transforming British telecommunications operator BT Group PLC into a broadband Internet powerhouse earlier this decade, was brought in to pull off similar results at Alcatel-Lucent.
The 1,000 new job cuts will come out of Alcatel-Lucent’s total white collar work force of 15,000, and come on top of a previous plan to cut 16,500 jobs by the end of next year. The company employed a total of 76,410 as of the end of 2007.
As part of its transformation Alcatel-Lucent also plans to sell its nearly 21 percent stake in defense contractor Thales SA. Last month the company said it was in exclusive talks with France’s Dassault Aviation on a sale of the stake for euro38 a share. Thales shares fell 1 percent to euro28.88 ($38.41) on Friday.
The Alcatel-Lucent merger aimed to boost margins through savings on expenses and research and development, but intense competition has forced the company to pass many of those savings to customers in the form of discounts.
From Chicago Tribune
