Light Reading
Review of managed services deals has resulted in lower headcount and a number of contract cancellations, though new deals are still being struck

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
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
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
LRTV Huawei Video Resource Center
Huawei's Media Solutions Are Here to Stay

9|19|14   |   4:35   |   (0) comments


The current media revolution requires rapid upgrades in technology. New formats (HD, 3D, 4K etc.) and the subsequent explosion of file sizes demand sophisticated network and storage architecture. Social media and the multiple distribution channels require a robust asset management system. Gartner analyst Venecia Liu speaks about the current technological trends in ...
LRTV Huawei Video Resource Center
Microgenesis on Huawei's Switches

9|19|14   |   3:57   |   (0) comments


Microgenesis is a solutions and system integrator company in the Philippines whose areas of expertise include data centers, networking and security products. In this video, Executive Director Jeffrey Choa talks to us about his customers needs and they benefit from using Huawei switches.
LRTV Huawei Video Resource Center
Network Solutions Help the Philippines Jump Ahead

9|17|14   |   2:59   |   (0) comments


In the past, the Philippines has under-invested in technology. Now, the CEO of Softshell talks about how Huawei products help the Philippines jump ahead as the economy improves.
LRTV Huawei Video Resource Center
VCS Observation for Safer Cities in the Netherlands

9|17|14   |   5:20   |   (0) comments


Holland's VCS Observation has been operating for 22 years. Its main goal is to get cities safer. CEO Wim van Deijzen tells us some of the challenges his company faces and how Huawei is helping to overcome these challenges.
LRTV Huawei Video Resource Center
A Conversation With Serbia's Ministry of Interior

9|17|14   |   4:38   |   (0) comments


At HCC 2014, the Assistant Minister of the Ministry of Interior of the Republic of Serbia talks to us about his projects and corporation with Huawei. Solutions like Safe City and E-Government and services like cloud computing are just some of the areas his department is interested in.
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (1) comment


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
Mosaik Solutions presents its 2014 maps of the wireless world in the US, including cable WiFi deployments, LTE network expansion and 600MHz auction boundaries.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
Photos: Qualcomm Takes Over San Francisco
Sarah Reedy, Senior Editor, 9/19/2014
Exclusive: Microwave Maven Exalt Is Cooked
Dan Jones, Mobile Editor, 9/22/2014
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
EMC Mulls Merger With HP or Dell – Reports
Mitch Wagner, West Coast Bureau Chief, Light Reading, 9/22/2014
Gigabit Nets Boost GDP, Says FTTH Council
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/23/2014
Like Us on Facebook
Twitter Feed