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Alcatel-Lucent Unveils Revamp

Ray Le Maistre

Following its July announcement on jobs and cost cuts, Alcatel-Lucent (NYSE: ALU) has unveiled a new business model, to be introduced from January 2013, that includes a greater focus on "core products," a smaller executive committee and more centralized operations. (See Alcatel-Lucent Restructures.)

But there's little detail to digest beyond a few changes of responsibility among members of the senior management team.

AlcaLu announced its Performance Program in late July, stating that it would reduce its annual operating costs by €750 million (US$958 million) by the end of 2013, in addition to the €500 million ($639 million) cost reduction program it already had in place. The Program was announced following a profit warning. (See AlcaLu Issues Full-Year Profit Warning.)

The Performance Program involves the loss of about 5,000 jobs, a greater focus on specific geographic markets and a more targeted approach to managed services contracts. (See Alcatel-Lucent to Cut 5,000 Jobs, Alcatel-Lucent Could Exit 25% of Services Deals, Alcatel-Lucent: Too Little, Too Late? and Pressure's On in Paris.)

Today's announcement sheds little light on exactly how those changes will affect the company's portfolio and employee base.

But let's look at what we do know.

Smaller senior team
With regard to the 5,000 job cuts, the vendor tells Light Reading that talks are still ongoing with unions and staff representatives and that no details on the job cuts will be announced before the end of September.

It does, though, look like some of the senior AlcaLu team might not have a role in the new operating model, as the senior executive committee team is being slimmed down from 13 to just 7 people. Here's a look at the current committee, starting with the seven individuals that remain at the top table, and how their roles are being affected:

  • Ben Verwaayen -- remains as CEO and head of the management committee.
  • Paul Tufano -- remains as CFO but also takes on the role of chief operating officer with global responsibility for supply chain, "strategic industries" and submarine.
  • Robert Vrij -- currently the head of strategic alliances and the Americas, Vrij becomes president, global sales and marketing.
  • Stephen Carter -- currently head of EMEA (Europe, Middle East and Africa) and corporate marketing and communications, Carter becomes the president of managed services, is handed responsibility for the corporate restructuring process (overseeing the Performance Program) and retains corporate marketing and communications responsibilities.
  • Philippe Keryer -- currently head of networks, Keryer becomes president of networks and platforms, in charge of four global business units that have separate P&L (profit and loss) responsibility. More on this below, but it's worth noting at this point that Keryer's key lieutenant will be Basil Alwan, who will manage not only the IP division but also the optical product business line.
  • George Nazi -- remains as president of the global customer delivery division.
  • Jeong Kim -- remains as head of Bell Labs and corporate strategy, but adds responsibility for the vendor's intellectual property portfolio (patents).

    The following current executive committee members will no longer be part of the top team and, with the exception of one individual, who retains a key role, there are no specific announcements about their future at the company:

  • Rajeev Singh-Molares -- currently head of Asia/Pacific, he will focus on the "transformation and development" of AlcaLu's operations in China, working closely with the chairman of the company's local joint venture, Alcatel Shanghai Bell Co. Ltd. .
  • Robin Dargue -- currently head of business and IT transformation.
  • Kenneth Frank -- currently in charge of the Reliance Industries Joint Initiative. (See AlcaLu, Reliance Form Joint Venture.)
  • Adolfo Hernandez -- currently head of software, services & solutions and strategic industries.
  • Christel Heydemann -- currently head of human resources and transformation.
  • Rod Powell -- currently head of operations.

    The product portfolio
    According to AlcaLu, the new strategy involves focusing on what the company does best and to no longer attempt to do everything -- being an "end-to-end" supplier is no longer the aim.

    That suggests that AlcaLu's extensive product portfolio will be slimmed down, but the vendor tells Light Reading that it can't provide specific details on product lines at this stage.

    There will be a major focus on IP and optics, though, so Basil Alwan will be playing a key role within Philippe Keryer's Networks and Platforms organization. (See IP Remains Alcatel-Lucent's Star Performer.)

    That organization, which will continue to push the concept of the High Leverage Network, comprises four separate business units:

    • Core Networks, the optical and IP portfolio
    • Fixed Networks (broadband access)
    • Wireless, with a focus on AlcaLu's existing customers in North America, EMEA and China
    • Platforms, or "unified software platforms for control, optimization and network analytics," according to the company's press release.

    The units are so wide-ranging that pretty much anything could be included, so customers, rivals and AlcaLu's staff are currently none the wiser about which product lines will survive beyond 2012.

    Further announcements will be made in the coming months about the headcount reduction and, potentially, about the future of certain areas of specific focus. In the meantime, the company's main task is to avoid becoming the next Nortel and ensure its survival.

    For more on recent developments at AlcaLu, see:

    — Ray Le Maistre, International Managing Editor, Light Reading

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    User Rank: Lightning
    12/5/2012 | 5:21:31 PM
    re: Alcatel-Lucent Unveils Revamp

    AlcaLu probably has an inverted Pyramid probably ... Ben needs some strong hands to flip it upside down !!... easy to turn it sideways though !!

    User Rank: Light Beer
    12/5/2012 | 5:21:31 PM
    re: Alcatel-Lucent Unveils Revamp

    not much beyond some aesthetic changes so far. The problem is much deeper than what can be achieved with such changes. At least is good that - as it seems - Ben is forced to prepare his successor.

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