Light Reading
A quarter of Alcatel-Lucent's managed services deals are up for review and many markets could be abandoned as it looks to cut costs

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
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.

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
September 23, 2014, Denver, CO
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
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
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
NFV & The Data Center: Top 10 Takeaways
Sarah Reedy, Senior Editor, 9/18/2014
New NFV Forum Focused on Interoperability
Carol Wilson, Editor-at-large, 9/16/2014
Pics: LR's Women in Telecom Breakfast
Sarah Reedy, Senior Editor, 9/16/2014
North KC Says Free Gigabit for All
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/16/2014
Like Us on Facebook
Twitter Feed