Alcatel-Lucent to lay off 10,000 staff globally

Telecommunications provider Alcatel-Lucent plans to lay off 10,000 staff globally in a cost-cutting bid. Photo/FILE

By AFP

IN SUMMARY
Alcatel-Lucent said 4,100 jobs would be cut in Europe, the Middle East and Africa by 2015, 3,800 in the Asia Pacific region, and 2,100 in North and South America.
Alcatel-Lucent has been facing stiff competition from bigger rivals in Europe and Asia including Ericsson, Nokia and Huawei.

Global telecommunications provider Alcatel-Lucent is to cut 10,000 jobs worldwide to reduce costs by 15 per cent within two years and focus on new technologies, it announced on Tuesday.

The French-US company has lurched from crisis to false dawn to crisis since it was formed of a merger in 2006, and is restructuring and refocusing its activities to reverse losses.

Chief executive officer Michel Combes, who informed the company's European works council of the 'Shift' plan, said it was time for tough measures.

"We launched the Shift Plan in June to give Alcatel-Lucent an industrially sustainable future," he said.

"To carry out this plan we must make difficult decisions ... The Shift Plan is about the company regaining control of its destiny," he said in a statement.

The cuts represent about a seventh of the company's global work force of 72,000.

Alcatel-Lucent said 4,100 jobs would be cut in Europe, the Middle East and Africa by 2015, 3,800 in the Asia Pacific region, and 2,100 in North and South America.

About 900 jobs will be axed in France, and according to French economic newspaper Les Echos, two sites in the cities of Rennes and Toulouse will be closed and plants elsewhere sold.

"By the end of 2015, Alcatel-Lucent will halve the number of its business hubs globally," the statement said.

One analyst, who declined to be named, commented that the job cuts were "indispensable, even if there is damage to employment, otherwise this company was heading into a wall."

He said: "This is the last-chance plan. If they don't succeed this time, it's the end, but if they manage to carry it through, it's a company which should succeed in two or three years' time." Finnish group Nokia was adopting similar radical measures, he said.

Analysts at Bank of America Meryll Lynch said that "it is a big step in the right direction." The restructuring could enable Alcatel-Lucent to achieve an adjusted operating margin of 5.0-10.0 per cent, and generate cash.

Another analyst commented that "we judge this plan to be credible", notably a strategy to sell assets, and praised the "remarkable" work carried out by Combes since his recent arrival in the top job.

Brokers Aurel BGC said that the company was "taking the bull by the horns" but without the support of broad opinion and of the government, application of the plan could be difficult.

Referring to this aspect, Bank of America Meryll Lynch said the fact that only 900 of the jobs were being cut in France might facilitate application of the restructuring. But in the short term, the company faced big restructuring charges and big capital investment to support growing business in China and the United States.