& cplSiteName &

Alcatel-Lucent to Cut 5,000 Jobs

Ray Le Maistre
7/26/2012
50%
50%

Little more than a week after announcing that it wouldn't be able to hit its operating margin targets for the year, Alcatel-Lucent (NYSE: ALU) has announced a new cost-cutting program that will result in 5,000 of the company's 78,000 staff losing their jobs. (See AlcaLu Issues Full-Year Profit Warning.)

The job cuts will impact all regions, CEO Ben Verwaayen said during today's earnings conference call.

News of the cuts came as AlcaLu announced second-quarter revenues of €3.55 billion (US$4.3 billion), down 7.1 percent from a year ago but up 10.6 percent from a weak first quarter. (See Bad Start to 2012 for AlcaLu.)

Second-quarter gross margins of 31.7 percent were down compared with 34.9 percent a year ago, while the vendor's adjusted operating loss (before one-time costs) was €31 million ($37.7 million). It reported a second-quarter net loss of €254 million ($309 million) compared with net profit of €43 million ($52.3 million) a year earlier.

'The Performance Program'
The company's new cost-reduction plan, dubbed The Performance Program, is designed to reduce AlcaLu's annual operating costs by €750 million ($911 million) by the end of 2013. AlcaLu had previously outlined ways to cut costs by €500 million ($608 million) by that timeline, but those measures did not include a major headcount reduction (though the company has been cutting staff during the past year).

Now, though, market and economic pressures have taken their toll. "These times demand firm actions," stated CEO Ben Verwaayen in today's earnings press release.

In addition to cutting jobs, AlcaLu intends to exit or renegotiate unprofitable managed services deals and quit unprofitable geographic markets. No mention was made of winding down or selling off product lines.

As part of the program AlcaLu is also looking to capitalize on its intellectual property and is setting up its patent portfolio as an independent profit center.

The cost-cutting plan wasn't enough to appease investors, as AlcaLu's share price on the Paris exchange fell by 5.4 percent in early trading Thursday morning to €0.83, giving the company a market value of just €1.9 billion ($2.3 billion).

For more
To see how this story's developed, check out the following:



— Ray Le Maistre, International Managing Editor, Light Reading

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
exon
50%
50%
exon,
User Rank: Light Beer
12/5/2012 | 5:26:18 PM
re: Alcatel-Lucent to Cut 5,000 Jobs


to me it is more than obvious that management team does not have a plan other than to delay as much as possible their ousting. The lack of detail makes this obvious: other than a nice fat (yet not even close to what is really needed that is around 30k people) headcount figure and some fuzzy commentary about exiting contracts, countries and the like, there is no substance.


furthermore the contradictions are visible: they claim 5k reduction when at the same time they consider exiting massive deals and markets. this should be, on itself, much more than 5k....


So good luck to the "performance" program but i think is DOA. Company needs some new brains asap and some more daring steps in the right directions.


 

optiwizard
50%
50%
optiwizard,
User Rank: Light Beer
12/5/2012 | 5:26:16 PM
re: Alcatel-Lucent to Cut 5,000 Jobs


It is more than abvious that a few years after the announcement of the big mergers ALU and NSN that it simply doesn't work. NSN has announced to leave the wireline business a few weeks ago and will be focussing 100% on the mobile market. ALU is still not focussing and trying to do wireless,wireline and enterprise business. There are today just too many companies making the same stuff and all competing on price to each other. Such a business model will kill one or more of the vendors in the near future. The vendors should rethink their strategy and some should leave particular business domains, that is the only way forward. There is no single vendor that is making serious profits for their shareholders, even not Huawei as they just think about growth today and profitability is for later. ALU is now a junk share and could probably be delisted in the near future. It is time for a drastic change in the telecom vendor world. The CEO's that don't understand that mechanism should leave the company as investors will not support them forever without ROI.

DCITDave
50%
50%
DCITDave,
User Rank: Light Beer
12/5/2012 | 5:26:15 PM
re: Alcatel-Lucent to Cut 5,000 Jobs


In the last year, Alcatel-Lucent's market cap has fallen more than 60 percent while the S&P is up nearly 19 percent. I think the story of ALU is not nearly as bad as the charts suggest.


 


<img alt="ALU Market Cap Chart" src="http://media.ycharts.com/charts/33e734465bb7798156d508aee55b4073.png">


ALU Market Cap data by YCharts

DCITDave
50%
50%
DCITDave,
User Rank: Light Beer
12/5/2012 | 5:26:14 PM
re: Alcatel-Lucent to Cut 5,000 Jobs


You raise a good point about debt. It would seem the company needs to file for bankruptcy to resolve that. How long before that happens?


&nbsp;


&nbsp;

timmyd
50%
50%
timmyd,
User Rank: Light Beer
12/5/2012 | 5:26:14 PM
re: Alcatel-Lucent to Cut 5,000 Jobs


Not nearly as bad as the chart suggests? Please buy a calculator and sit down with Alcatel's balance sheeet. The company needs to generate about 120% of its current market capitalisation in cash in the next 3 years to merely repay its debt - never mind pay salaries and invest in the business going forwards. It has generated less than zero net cash in the last 3 years, a fact that could be covered up by asset sales but that process is now done. The fans of Alcatel have argued all the way down that the stock is cheap - that is because they are clearly incapable of financial analysis. Alcatel's current equity is all but worthless and this will be state owned within 2 years

macster
50%
50%
macster,
User Rank: Light Bulb
12/5/2012 | 5:26:12 PM
re: Alcatel-Lucent to Cut 5,000 Jobs


Indeed. Was expecting at least 15k. Among other things.


A good time to make some &euro;&euro;&euro; of their shares though.

52470
50%
50%
52470,
User Rank: Light Beer
12/5/2012 | 5:26:09 PM
re: Alcatel-Lucent to Cut 5,000 Jobs


To paraphrase Bill Parcells, "You are as good as the scoreboard says you are." &nbsp;ALU is not scoring nearly enough. &nbsp;


&nbsp;


The low barrier entry with SIP is commoditizing prices. &nbsp;Good the for the consumer but bad for business built on 60-70% gross margin. &nbsp;

From The Founder
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    LRTV Documentaries
    LRTV Report: Mobile Core Innovation

    4|28|16   |   25:32   |   (0) comments


    Hear from multiple industry experts from Deutsche Telekom, SK Telecom, Heavy Reading, Huawei, Cisco, Ericsson, Nokia, NEC and many more about developments in the mobile core as operators virtualize their IMS and evolved packet core systems and prepare for a 5G world.
    LRTV Huawei Video Resource Center
    NFV World Congress Highlight

    4|26|16   |     |   (0) comments


    The highlight of the NFV World Congress contains exciting telecom news. Join us for an inside look at Huawei's ICT 2020 plan and its latest collaboration with industry leaders.
    LRTV Interviews
    Unified Comms Finds Its Voice

    4|25|16   |   03:44   |   (0) comments


    Peter Quinlan, VP of UCC Product Management at Tata Communications, talks about the evolution of the unified communications and collaboration services sector and how voice is now a big part of current developments.
    LRTV Documentaries
    So... What Do We Do Now?

    4|25|16   |   03:24   |   (0) comments


    After a long hiatus, Max Dingman, the CEO of a GeeGhiz, returns for a motivational board room pep talk.
    LRTV Documentaries
    NAB 2016 Highlights

    4|21|16   |     |   (0) comments


    Light Reading's Cable/Video Practice Leader Alan Breznick climbs down from the slots to tell us about the latest news in broadcast technology at NAB 2016 in Las Vegas.
    Between the CEOs
    CEO Chat: Deepfield's Craig Labovitz

    4|21|16   |     |   (0) comments


    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Shades of Ray
    Leading Lights 2016: Shortlists Announced

    4|20|16   |   0:53   |   (0) comments


    The judging is over and the Leading Lights 2016 shortlists have been published -- you can see who made the cut by clicking on this link.
    LRTV Custom TV
    Introducing MulteFire – Qualcomm at MWC 2016

    4|18|16   |   3.29   |   (0) comments


    MulteFire is the latest option for using LTE in unlicensed spectrum. As oppose to its close 'siblings', LAA and LTE-U, MulteFire operates solely in unlicensed spectrum, which enables it to offer the best of two worlds – LTE-like performance with WiFi-like deployment simplicity. In this interview, Sanjeev Athalye, Sr. Director, Product Management at Qualcomm ...
    Between the CEOs
    CEO Chat: Grant Van Rooyen of Cologix

    4|18|16   |     |   (0) comments


    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    LRTV Huawei Video Resource Center
    ONS 2016 – Demonstration of Huawei's NetMatrix Multi-Vendor SDN Orchestrator

    4|15|16   |     |   (0) comments


    This demonstration shows how Huawei's NetMatrix SDN Orchestrator (SDN-O) addresses an operator's core service agility needs for services spanning multi-domain, multivendor networks: it includes a demonstration of:
    - Rapid New Service Design: using YANG to model a complex example of multi-domain, multivendor L3VPN network connectivity service that ...
    LRTV Custom TV
    AT&T Wants to Own North Carolina

    4|15|16   |     |   (1) comment


    Venessa Harrison, president of North Carolina for AT&T, tells how the company will expand its GigaPower service beyond the seven N.C. cities it already serves.

  • This blog, sponsored by AT&T, is the second part of a ten-part series examining next-generation broadband technologies titled "Behind the Speeds."
  • LRTV Interviews
    Will NC Be First Gigabit State?

    4|15|16   |     |   (1) comment


    Alan Fitzpatrick, co-founder of Charlotte Hearts Gigabit, spells out the state's progress in at least starting to wire nearly every major market for gigabit service.
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    September 13-14, 2016, The Curtis Hotel, Denver, CO
    December 6-8, 2016,
    June 16-18, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Infographics
    A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
    Hot Topics
    Ultra-Broadband Summit, Hong Kong
    Iain Morris, News Editor, 4/27/2016
    GoT Fans Curse HBO (Not Right) Now
    Mari Silbey, Senior Editor, Cable/Video, 4/25/2016
    Analysts More Than Bullish on Comcast MVNO
    Mari Silbey, Senior Editor, Cable/Video, 4/22/2016
    Mitel Asks: What Time of Day Do You Shower?
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/25/2016
    Charter Jumps Gun on TWC Restructuring
    Mari Silbey, Senior Editor, Cable/Video, 4/26/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    Animals with Phones
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.