& cplSiteName &

Alcatel-Lucent Could Exit 25% of Services Deals

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

Alcatel-Lucent (NYSE: ALU), which today reported a second-quarter net loss of €254 million (US$309 million), is to review a quarter of its 68 managed services deals as it looks to exit unprofitable contracts as part of its new cost-cutting program and claw the company back into the black. (See Alcatel-Lucent to Cut 5,000 Jobs.)

During today's second-quarter earnings conference call, CFO Paul Tufano noted that 25 percent of AlcaLu's current 68 managed services deals will either be renegotiated, exited or not renewed when the initial contract period expires, and that 15 deals are already under review.

He also noted that "many" of the deals under review are set to be up for renewal between now and the end of 2013. The ones under the greatest scrutiny are those heavily focused on network maintenance.

Currently, AlcaLu's managed services contracts deliver annual revenues of €1 billion (US$1.23 billion) and engage 14,000 of its staff. The CFO noted on the call that annual managed services revenues could fall by as much as €300 million ($369 million) and that any jobs that are transferred or lost as a result of AlcaLu cutting the number of managed services contracts it handles would be additional to the 5,000 job cuts announced today.

AlcaLu isn't the only vendor to realize it needs to be more picky about its services deals: Nokia Networks is also being more selective about its managed services contracts and has already extracted itself from a major deal in Brazil. (See page 2 of the multi-page interview, NSN's Rajeev Suri: Restructuring, Research & Resilience .)

Geographic focus
The vendor currently conducts business in 130 countries but 96 percent of its revenues come from the top 60 markets and those are the markets AlcaLu is going to focus on, while many of the remainder will be exited. "We can't be in the bottom 40 markets that [deliver] 1 percent of the revenues," stated CEO Ben Verwaayen, who noted that the process of quitting countries will be "painful" but necessary.

In an associated move, the company has also outlined plans to use sales channels, rather than deal with customers direct, in some as yet unidentified countries.

— Ray Le Maistre, International Managing Editor, Light Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
mathon
50%
50%
mathon,
User Rank: Light Beer
12/5/2012 | 5:26:03 PM
re: Alcatel-Lucent Could Exit 25% of Services Deals


I think this is a right decision. Doing business is to earn money. It has nothing to do with being picky. Or in another way, "being picky" is the essence of "business".


The only thing that I am not for is the time, why make this decision when reporting net loss? Why can't announce this decision at another time? In this way, it shows that ALU is more reactive instead of being proactive about its business.


 


One Ex-ALUer

JasonMarcheck
50%
50%
JasonMarcheck,
User Rank: Light Beer
12/5/2012 | 5:25:58 PM
re: Alcatel-Lucent Could Exit 25% of Services Deals


Agree on the timing issue. This is not a new strategy for ALU. They've been indicating that they are going to pursure this strategy going back at least as far as MWC'12.  But, by talking about it now, it does seem like a reaction to the financials instead of the business decision that it is.

From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
No Stopping Cable's Ethernet Gains

12|9|16   |     |   (0) comments


Vertical Systems' Erin Dunne explains why US cable operators, which now command a record-high 26% of the Ethernet market, will keep boosting their share.
LRTV Interviews
Fixing IoT Security Is an Ecosystem Challenge

12|9|16   |   05:34   |   (1) comment


Level 3 Communications' Chief Security Officer Dale Drew says service providers, manufacturers and even consumers must combine to halt massive DDoS attacks using IoT devices in botnets. The solution he has in mind includes reputation-based routing by the service provider but also more secure endpoint devices and greater consumer awareness.
LRTV Interviews
Cox Clears $2B in Business Revenue

12|8|16   |     |   (0) comments


Cox's Jeff Breaux discusses how the third-largest US MSO will reach the $2 billion revenue mark this year and plans to hit $3 billion by 2021
LRTV Interviews
Can Cable Climb Upmarket?

12|7|16   |     |   (0) comments


Carol Wilson and Alan Breznick assess cable's prospects for winning more enterprises in a landscape rocked by corporate M&A activity.
Women in Comms Introduction Videos
TalkTalk Exec: Find Your North Star at Work

12|7|16   |   3:38   |   (1) comment


Women need to find their purpose, a professional North Star, and create a personal board for themselves, according to Alex Tempest, director of partners at TalkTalk Business.
LRTV Interviews
Verizon: Beware Unknown Unknowns

12|7|16   |   04:58   |   (0) comments


Chris Novak, director of the Verizon Enterprise Solutions Risk Team, explains that enterprises who don't conduct a thorough audit of their assets often leave some things unprotected because they don't know they exist. Many times these unprotected assets are part of corporate M&A activity but left unshielded they can become a hacker's playground, he tells Light ...
LRTV Interviews
ETSI's CTO Talks NFV, 5G & NGP

12|5|16   |   09:45   |   (0) comments


Adrian Scrase, CTO at standards body ETSI, talks about the various initiatives and specifications developments related to NFV, 5G and NGP (next-generation protocols) that will underpin next-gen networks.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (2) comments


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BTís Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
Upcoming Live Events
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Cable Nodes Becoming a Choke Point
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 12/5/2016
Consolidated Snaps Up Fairpoint for $1.5B
Iain Morris, News Editor, 12/5/2016
Small Arctic ISP Caches Netflix in New Way
Mari Silbey, Senior Editor, Cable/Video, 12/7/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
A Mobile Safari Click Here
Literally.
Latest Comment
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.