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Alcatel-Lucent Gives Details on Plan to Cut 10,000 Jobs Alcatel-Lucent Gives Details on Plan to Cut 10,000 Jobs
(about 5 hours later)
PARIS — Alcatel-Lucent, the French-American telecommunications equipment maker, has laid out the details of a comprehensive restructuring that includes 10,000 job cuts worldwide over the next two years. PARIS — Alcatel-Lucent is confronting some difficult choices.
The plan, which was being presented to the company’s European workers council Tuesday, is aimed at cutting fixed costs by 15 percent by the end of 2015, an amount currently equivalent to 1 billion euros, or about $1.3 billion. The French-American telecommunications equipment maker announced on Tuesday a major restructuring plan that includes 10,000 job cuts worldwide over the next two years.
The strategy, which was presented to the company’s European workers council Tuesday, is aimed at cutting fixed costs by 15 percent by the end of 2015, an amount currently equivalent to 1 billion euros, or about $1.4 billion.
“All geographic areas where Alcatel-Lucent operates will contribute” to the job cuts, the company said in a statement, including 4,100 positions in Europe, the Middle East and Africa; 3,800 in the Asia-Pacific region; and 2,100 in the Americas.“All geographic areas where Alcatel-Lucent operates will contribute” to the job cuts, the company said in a statement, including 4,100 positions in Europe, the Middle East and Africa; 3,800 in the Asia-Pacific region; and 2,100 in the Americas.
Simon Poulter, an Alcatel-Lucent spokesman, said the 10,000 job cuts represented a “net” figure. Another 5,000 jobs might also be eliminated as part of the overhaul, he said, but they would be balanced by a similar number of new hires.
Mr. Poulter said he could not provide any additional details on how the layoffs might play out in the United States, where its local headquarters is in Murray Hill, N.J.
The job cuts work out to nearly 14 percent of the 72,344 worldwide employees Alcatel-Lucent reported at the end of 2012.The job cuts work out to nearly 14 percent of the 72,344 worldwide employees Alcatel-Lucent reported at the end of 2012.
Alcatel-Lucent, based in Paris, was formed from the 2006 merger of the French telecommunications infrastructure champion Alcatel and Lucent Technologies, a former AT&T unit. The combined company has never fulfilled expectations, fighting a constant battle to remain relevant in a market increasingly dominated by Ericsson, Huawei Technologies and Nokia Solutions and Networks.
Only the size of the job losses had been in question after Alcatel-Lucent’s new chief executive, Michel Combes, said in June that he would seek to transform the company over three years from a generalist telecommunications equipment maker into a specialist in the systems at the heart of next-generation networks, including cloud computing, Internet networking and ultra-broadband access.Only the size of the job losses had been in question after Alcatel-Lucent’s new chief executive, Michel Combes, said in June that he would seek to transform the company over three years from a generalist telecommunications equipment maker into a specialist in the systems at the heart of next-generation networks, including cloud computing, Internet networking and ultra-broadband access.
The layoffs represent the latest job cuts in the telecommunications industry, which has become increasingly competitive as companies vie for orders from the likes of Vodafone and China Mobile as they upgrade their data network infrastructure.
Nokia Solutions and Networks, one of Alcatel-Lucent’s major European rivals, announced 17,000 job cuts in 2011 as the Finnish firm carried out a major restructuring of its global operations. Nokia Solutions and Networks is owned by Nokia, which recently sold its struggling handset unit to Microsoft for $7.2 billion.
As many of the world’s largest telecom companies plan major upgrades to their cellphone networks, Asian rivals like Huawei and ZTE are aggressively expanding, and analysts question whether Alcatel-Lucent’s restructuring plans will allow it to compete successful for new orders.
The French-American company has made so-called fourth generation cellphone infrastructure projects a priority, and announced last month that it had secured a deal with China Mobile, the world’s largest carrier, to deploy some of the upgrades to the firm’s data network.
“These changes have been a long time coming,” said Sylvain Fabre, a research director at the consulting firm Gartner in London. “The company needs to make choices about what areas it wants to prioritize.”
Alcatel-Lucent, based in Paris, was formed from the 2006 merger of the French telecommunications infrastructure champion Alcatel and Lucent Technologies, a former AT&T unit. The combined company has never fulfilled expectations, fighting a constant battle to remain relevant in an increasingly competitive sector.
Mr. Combes said in a statement Tuesday that the company had to “make difficult decisions” and that it would “make them with open and transparent dialogue.”Mr. Combes said in a statement Tuesday that the company had to “make difficult decisions” and that it would “make them with open and transparent dialogue.”
Alcatel-Lucent’s restructuring, he added, “is about the company regaining control of its destiny.”Alcatel-Lucent’s restructuring, he added, “is about the company regaining control of its destiny.”
Simon Poulter, an Alcatel-Lucent spokesman, said in an interview that the 10,000 jobs would be eliminated through a combination of outright layoffs, outsourcing and natural attrition. He revised his statement in an earlier interview that suggested an additional 5,000 jobs were possibly on the chopping block, a figure widely reported in the media, including in the French daily La Tribune.
Mr. Poulter said the company also expected to add about 3,700 new employees to bring the skills of its work force in line with its strategic objectives in research and development. He stressed that there would be a net reduction of 10,000 jobs, but declined to comment further.
In France, where laying off employees is discouraged by the labor code, Alcatel-Lucent said it would cut about 900 jobs next year, largely in the areas of support, administration and sales, while also recruiting about 200 new engineers and technicians equipped with the skills its new plan requires. Another 900 employees face “internal mobility, transfers to partners and redeployments” by 2015, it said.In France, where laying off employees is discouraged by the labor code, Alcatel-Lucent said it would cut about 900 jobs next year, largely in the areas of support, administration and sales, while also recruiting about 200 new engineers and technicians equipped with the skills its new plan requires. Another 900 employees face “internal mobility, transfers to partners and redeployments” by 2015, it said.
The company will also reduce the number of its international business hubs by half and redirect its research and development spending toward growth areas, it said.The company will also reduce the number of its international business hubs by half and redirect its research and development spending toward growth areas, it said.
Shares of Alcatel-Lucent rose 1.3 percent in Paris afternoon trading. The price has almost doubled to nearly 3 euros since Mr. Combes announced his plan on June 19. Shares of Alcatel-Lucent slid 4 percent in Paris trading. The price had almost doubled to nearly 3 euros since Mr. Combes announced his plan on June 19.
His restructuring also calls for the company to gain at least 1 billion euros from the disposal of nonstrategic assets. Nokia has been widely described as a likely bidder for the company’s wireless business, which is currently losing money.His restructuring also calls for the company to gain at least 1 billion euros from the disposal of nonstrategic assets. Nokia has been widely described as a likely bidder for the company’s wireless business, which is currently losing money.
Stuart Jeffrey and Woo Jin Ho, analysts at Nomura International in New York, wrote in a research report that despite regulatory uncertainty and questions about how customers might react to such a deal, “an acquisition of Alcatel-Lucent’s wireless assets by Nokia would address both companies’ issues so well that a transaction is highly likely.”Stuart Jeffrey and Woo Jin Ho, analysts at Nomura International in New York, wrote in a research report that despite regulatory uncertainty and questions about how customers might react to such a deal, “an acquisition of Alcatel-Lucent’s wireless assets by Nokia would address both companies’ issues so well that a transaction is highly likely.”
French employees weary of insecurity and years of restructuring met the news of the downsizing with dismay. One union, the French Confederation of Management – General Confederation of Executives, denounced what it called “an unacceptable social tsunami.” It called for a halt to factory closings and for employees threatened with layoffs to be redeployed into the business areas being targeted under the new plan. French employees weary of insecurity and years of restructuring met the news of the downsizing with dismay. One union, the French Confederation of Management – General Confederation of Executives, denounced what it called “an unacceptable social tsunami.” It called for a halt to factory closings and for employees threatened with layoffs to be redeployed into the business areas being targeted for growth under the new plan.
Alcatel-Lucent has been in a state of flux almost from the moment of its creation, trying to respond to the revolution in communications technology while servicing a heavy debt burden, which currently stands at 5.7 billion euros. Mr. Combes, formerly chief executive of the British cellphone operator Vodafone, said in an interview published Tuesday in the French daily Le Monde that, for Alcatel-Lucent, “Everyone recognizes that this is the last chance. The situation in the enterprise is serious, very serious,” reaching a point last year where the company had to pledge its patents to secure bank financing.
Mr. Combes, formerly chief executive of the British cellphone operator Vodafone, said in an interview published Tuesday in the French daily Le Monde that his goal was “to restore to Alcatel-Lucent the mastery of its own destiny.” The previous restructuring plans “were not sufficient for resolving the problems of the group,” he said. The new plan “aims precisely at restoring industrial ambition.”
“Everyone recognizes that this is the last chance,” Mr. Combes told the newspaper. “The situation in the enterprise is serious, very serious,” reaching a point last year where the company had to pledge its patents to secure bank financing.
The previous restructuring plans “were not sufficient for resolving the problems of the group,” he said. The new plan “aims precisely at restoring industrial ambition. Inside the company, I think people understand that if I have to make difficult choices, it’s because I believe in the future of Alcatel-Lucent.”