Alcatel/Lucent: No Job Cut Clarity Yet
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