Light Reading

AlcaLu Shrinks Its Managed Services Unit

Ray Le Maistre
4/29/2013
50%
50%

The ongoing review of Alcatel-Lucent's managed services deals has resulted in a headcount reduction of thousands and the cancellation of a number of contracts, said CFO Paul Tufano during the vendor's first-quarter earnings conference call Friday. The company announced a review of its managed services engagements in July 2012, with the aim of cutting costs and increasing margins. At the time, Tufano noted that 25 percent of AlcaLu's 68 managed services deals would either be renegotiated, exited or not renewed when the initial contract period expired, and that 15 deals were under review. (See Alcatel-Lucent Could Exit 25% of Services Deals.) By the end of March, AlcaLu had "addressed 10 of the 15" deals identified last July, noted Tufano on Friday. Some have been exited, while others are in the process of renegotiation or termination, resulting in a headcount reduction of 3,200 from the Managed Services business unit during the first quarter of this year. In total, Alcatel-Lucent reduced its staffing levels by 5,400 during the first three month of 2013. But that doesn't mean the vendor isn't seeking new business. Tufano said that the company is now focused on signing professional services deals related to network transformation projects, while deals based on network operations and maintenance are out of favor. (See Euronews: AlcaLu Scores at KPN, Alcatel-Lucent Wins $1B Deal in India and Alcatel-Lucent Wins Managed Services Deal.) The overall impact of the new focus is likely to be lower managed services revenues but higher margins, with Tufano confirming that the review process will ultimately result in the loss of deals worth about €400 million ($523 million). During the first quarter, AlcaLu's managed services unit generated revenues of €204 million ($267 million) and reported an operating loss of €5 million ($6.5 million). If the company's contract evaluation strategy is the right one, the managed services unit should soon start reporting positive operating income on a quarterly basis. Now it's the turn of AlcaLu's other business units, particularly Networks & Platforms, to come under scrutiny. (See Alcatel-Lucent CEO Preps Kill List.) CEO Michel Combes declined to elaborate on any early thoughts he may have about the vendor's future, saying only that he will share his views and decisions with staff and investors in the early summer and that he is focused on growth and performance. — Ray Le Maistre, Editor-in-Chief, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Ray Le Maistre
50%
50%
Ray Le Maistre,
User Rank: Light Sabre
4/30/2013 | 8:21:33 AM
re: AlcaLu Shrinks Its Managed Services Unit
lower costs, better margins and the chance to survive.

NSN Maintains Momentum

http://www.lightreading.com/bl...
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/29/2013 | 3:01:39 PM
re: AlcaLu Shrinks Its Managed Services Unit
What's the success metric for NSN?
Ray Le Maistre
50%
50%
Ray Le Maistre,
User Rank: Light Sabre
4/29/2013 | 2:32:23 PM
re: AlcaLu Shrinks Its Managed Services Unit
Not one Huawei needs to think about too much currently but one it needs to keep in mind.
In the meantime, NSN appears to have turned around its fortunes with this approach and ALU's managed services division looks like it has improving operating results as a result of its re-focus.
Now let's see what happens to the rest of the company!
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/29/2013 | 1:23:06 PM
re: AlcaLu Shrinks Its Managed Services Unit
I wonder what Huawei thinks of the "success through shrinkage" strategy.
Flash Poll
From The Founder
Ericsson's Hyperscale Datacenter System (HDS) 8000, featuring Intel's Rack Scale Architecture, caused a stir when it was announced at MWC 2015. For more on this revolutionary product, join me on Thursday, April 30 at 12:00 p.m. EST for a Super Webinar event, A New Hardware Paradigm for the Telco Data Center.
LRTV Documentaries
CableLabs' Clarke Updates Cable Virtualization

4|23|15   |   05:41   |   (1) comment


Former BT exec now leading CableLabs' NFV and SDN efforts explains key role of open source and updates efforts to virtualize the home network.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. II

4|23|15   |   08:19   |   (1) comment


In the second installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about cultural change, network slicing and technology advances.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. I

4|23|15   |   09:27   |   (3) comments


In the first installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about the incredible transformation underway in the communications networking industry.
LRTV Documentaries
LTE Paves the Way for the 5G Revolution

4|20|15   |   4:20   |   (0) comments


Håkan Andersson, head of 5G product strategy of the Radio Business Unit at Ericsson, discusses the role of LTE, the US and other industry verticals in building a true 5G ecosystem.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
LRTV Huawei Video Resource Center
Huawei's Data Center Power Play

4|15|15   |   6:22   |   (0) comments


Huawei has developed industry-leading energy efficiency capabilities for its indoor and outdoor data center solutions, explains Dr. Fang Liangzhou, vice president of Huawei's Network Energy product Line.
LRTV Huawei Video Resource Center
Huawei’s Routers, Switches Get the Green Mark

4|15|15   |   2:02   |   (0) comments


TUV Rheinland's Frank Dudley explains how Huawei's routers and switches have been successfully tested by energy efficiency experts and have gained Green Mark Certification.
LRTV Documentaries
A Finn, a Frenchman & a Guy From New Jersey Walk Into a Merger...

4|15|15   |   3:17   |   (0) comments


Stop us if you've heard this one before... Light Reading CEO Founder & CEO Steve Saunders weighs in on the technical and cultural implications of a Nokia and Alcatel-Lucent merger.
LRTV Huawei Video Resource Center
Accounting for Better Solutions

4|10|15   |   02:31   |   (1) comment


Murad Yousuf, CTO at Saudi Arabia's Ministry of Finance (Dept. of Zakat & Income Tax), talks about the benefits of deploying router technology from Huawei.
LRTV Huawei Video Resource Center
What's in Store for Huawei & DataCore?

4|10|15   |   05:44   |   (0) comments


At the CeBIT trade show in Hannover, Germany, George Teixeira, CEO of software-defined storage (SDS) specialist DataCore Software, explains why he has just signed a partnership agreement with Huawei Technologies.
Upcoming Live Events
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
In its latest survey covering network operators' plans and strategies for ICT transformation, Heavy Reading asked telecom operators worldwide to identify the most important goals and objectives for their ICT transformation initiatives. Heavy Reading also asked operators about the importance of a "digital first" strategy, which enables customers to complete an interaction across different digital channels, such as web and mobile self-service and social media.
Hot Topics
What if the Comcast Merger Fails?
Mari Silbey, Independent Technology Editor, 4/20/2015
Google's WiFi-First Mobile Service 'Fi' Is Here
Dan Jones, Mobile Editor, 4/22/2015
Comcast Merger May Hinge on Hulu
Mari Silbey, Independent Technology Editor, 4/22/2015
Comcast Formally Ends Its Bid for TWC
Mari Silbey, Independent Technology Editor, 4/24/2015
Google Ready to Release Thousands of Loons
Sarah Thomas, Editorial Operations Director, 4/20/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Many leading communications companies can claim to have undergone significant periods of reinvention during their histories, but none have been through more major ...
Data Center Interconnect, or DCI, is one of the hottest sectors in telecom currently. Since coming back to Light Reading last year, prodigal-son style, I've ...
Cats with Phones
Learning Curve Click Here
Pierre could never remember how to use Excel.
Latest Comment