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Alcatel/Lucent: No Job Cut Clarity Yet

Serge Tchuruk, CEO of Alcatel (NYSE: ALA; Paris: CGEP:PA), and Pat Russo, CEO of Lucent Technologies Inc. (NYSE: LU), took to the stage in Paris today to answer questions about their merger agreement. (See Alcatel, Lucent Seal Deal and Alcatel/Lucent: First Reactions.)

While both the executives stressed that the merger was focused on growth opportunities, there was a great deal of interest in the impending job cuts -- 10 percent of the new company's 88,000 staff are set to lose their jobs. But neither of the execs was giving anything away about which countries or which parts of the combined Alcatel/Lucent might be affected by redundancies.

"We're driven by business logic, and we'll adopt a fair and balanced approach as we rationalize," stated Russo, who will be the CEO of the new Paris-based company. "We recognize the sensitivity of the employees, and we'll be fair, balanced, and caring in approaching this."

Tchuruk, meanwhile suggests the cuts are minimal. "There's no need for us to carry out massive layoffs, but there will be synergies and overlaps [that will result in job losses]. We'll continue working with the union reps in the countries where we operate." He added that the staffing situation will "be analyzed further."

Tchuruk, who was due to step down as Alcatel's CEO on June 1, also said he'll be staying on as CEO until the deal is closed (due in the next six to 12 months) and he can hand over to Russo.

And what of Russo? How will she get on as the head of a French company based in Paris? "I studied French at high school and was pretty good at it, but that was a long time ago," she said, adding that she was looking forward to brushing up her language skills. Bonne chance with that, Pat!

Russo also addressed the issue of Lucent's pension funds, which have been helping the company into the black in recent times. (See Pension Concerns Hit Lucent.)

"Lucent's pension fund is well funded under U.S. government guidelines, and we haven't been required to make any contributions since [Lucent was] formed in 1996," said Russo, adding that it was "unlikely that any contributions would be needed before 2010."

As for retiree healthcare, Russo said Lucent has been focused on caring for its retirees needs "while balancing what's affordable," a statement unlikely to appease retired Lucent staffers that are fighting for retention of benefits and reduced executive remuneration. (See Lucent Retirees File Lawsuit and Lucent Shareholders Rebel .)

The two heads spent a lot of time emphasizing the R&D strength of the combined companies. Tchuruk said that, between them, the companies spend about 12 percent of their combined $25 billion revenues on R&D, while Russo said that between them the companies have 26,000 developers and engineers and 25,000 patents.

"We have an R&D investment capacity that is the most significant in the industry. Our customers know how significant R&D is in this industry, and they need companies that can invest and innovate on their behalf," she added.

There was also interest in what the giant vendor might do next: Might it look to consolidate the sector further by subsuming other vendors such as Nortel Networks Ltd. ? (See Alcatel/Lucent: The Domino Factor.)

"We are merging Alcatel and Lucent for now," stated Serge the Merge, but he added that in specialist niche areas such as video infrastructure "we may acquire companies when the time comes."

— Ray Le Maistre, International News Editor, Light Reading

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Stevery 12/5/2012 | 3:58:55 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet Pat says: "We recognize the sensitivity of the employees, and we'll be fair, balanced..."

Hmmm. Fair and balanced. Where else have I heard that refrain?
spelurker 12/5/2012 | 3:58:54 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet > Pat says: "We recognize the sensitivity of the employees,
> and we'll be fair, balanced..."
>
> Hmmm. Fair and balanced. Where else have I heard that refrain?

So does that mean that they'll only lay off liberals/Democrats? ;)

Serously though, I don't get a good warm fuzzy feeling that they've got a clue how they're going to select the 8,800 layoffs or leverage their R&D. I predict at least a year of blind stumbling around.

chip_mate 12/5/2012 | 3:58:53 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet "> Hmmm. Fair and balanced. Where else have I heard that refrain?
So does that mean that they'll only lay off liberals/Democrats? ;)"


There goes New Jersey. Boom! Bye Bye Murray Hill.
Scal2013 12/5/2012 | 3:58:48 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet Well, this is symbolic in some ways. Telecom in the USA once was home to some the brightest engineers and scientists. Lucent being not much more than a politically correct shell will finally go where most of the great technology has gone. OVERSEAS. When Alcatel took over DSC , it did not take long for the arrogance of France to dismantle DSC and leave , Sales, Software Dev. intact but make sure the best of the research was done in Europe. They immediately wanted to replace American products with theirs. Layoffs were many. It will happen to you too !!!!
sigint 12/5/2012 | 3:58:47 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet bringbacktelcom:
When Alcatel took over DSC , it did not take long for the arrogance of France to dismantle DSC and leave , Sales, Software Dev. intact but make sure the best of the research was done in Europe. They immediately wanted to replace American products with theirs. Layoffs were many. It will happen to you too !!!!
___________________________________________________

But the story at Timetra was completely different, right? I would like to believe that Alcatel would opt for emulating success, rather than failure.

Anyways, best of luck to all LU and ALA folks.
optodoofus 12/5/2012 | 3:58:46 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet I'm amazed that no one has challenged them on that 10% redundancy number. I find it difficult to believe that number. It is way too low for two companies of that size merging together. They aren't going to achieve the synnergies they need without 30% personnel cuts. I guess we'll know the truth in a couple of years. But for now, at least 9K engineers in the US will be getting le boot.

I was amused about how Pat said they would lay people off in a "caring" way.

optodoofus
lighten up!! 12/5/2012 | 3:58:46 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet No offense Pat, but there might be better qualified CEO candidates out there that are fluent in French & English. May be you should post this position on the Lucent web. It would probably be a good thing for the new company to have someone new with fresh ideas.
firstmile 12/5/2012 | 3:58:46 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet Caring = no public hangings
firstmile 12/5/2012 | 3:58:46 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet sigint,
You're definitely right with regard to Timetra. However that acquisition was on a different scale to DSC and certainly big LU.

I think the most interesting points are:
1. Russo as CEO...I still cannot believe it
2. Quigley NOT the CEO
3. Serge staying on for 12 months....hmmmm I would bet my money that after LU product strategies and lay-offs are determined, Pat walks off with a bunch of severance....and

Quigly or Hubert Depesqudue become CEO and Serge "retires"
...first
Stevery 12/5/2012 | 3:58:44 AM
re: Alcatel/Lucent: No Job Cut Clarity Yet I'm amazed that no one has challenged them on that 10% redundancy number.

I had the same thought, and I arrived at the conclusion that it would just be too internally demoralizing to announce 30% layoffs on the day of the merger.

Probably more after the first round... it's easier to find the rot when the obvious deadwood is cleared.
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