Alcatel-Lucent Stays Tight-Lipped
Alcatel-Lucent (NYSE: ALU) is alive and kicking, and has been showing off its new purple corporate logo (see image below). But today's introductory press conference in Paris provided little else in the way of visibility on staff cuts, product rationalization, or expectations for 2007. (See Alcatel-Lucent Unveils Logo, Alcatel, Lucent Merge, and Farewell, Lucent.)
Non-executive chairman Serge Tchuruk and CEO Pat Russo gave an overview of the company, highlighting the company's strengths across the fixed, mobile, and services sectors.
They also put a spotlight on the new company's global nature. Alcatel-Lucent's combined annual revenues of €18.6 billion ($24.7 billion) come evenly from three regions: North America, Europe, and the Rest of the World (Asia/Pacific, Middle East and Africa, Caribbean and Latin America), based on 2005 results.
But the vendor isn't in a position yet to answer the questions most observers have on topics like layoffs.
As the company was created late Thursday, the Alcatel-Lucent strategy execution plan comes into effect as of today. Russo said the "appropriate procedures and communications" regarding the headcount reduction plan, which will see 9,000 of the company's 79,000 staff receive pink slips, will "be put in place during the next few months."
If those numbers look slightly different from April, when the merger was first announced, then well-spotted. The two companies said about 10 percent of the combined workforce of 88,000 would be cut. (See Alcatel, Lucent Seal Deal.)
Since then, though, Alcatel has agreed to sell its satellite and railway signaling business units to Thales SA (Paris: TCFP.PA), along with the relevant staff. So now Alcatel-Lucent has 79,000 staff, the planned headcount reduction of 9,000, as confirmed today, accounts for roughly 11 percent of the staff. (See Alcatel, Thales Agree.)
As for product rationalization, the sales force is taking the new company's product roadmaps out to major customers today. If any platforms get preference over another, where the product sets overlap (in IMS for example), "then we will be ensuring a continuation of service," says an Alcatel-Lucent spokesman.
Alcatel was due to brief analysts on its product roadmap in mid-November, but that timetable has slipped, possibly due to the security issues raised late in the pre-merger process. (See US to Watch Alcatel Lucent and Alcatel, Lucent Face Security Grilling.)
The duo also deflected questions about the immediate impact that the merger's integration process, and forthcoming headcount reductions, will have on the business. Russo said customers "may pause for a short time" to see what the vendor has planned, while staff may be distracted, wondering if they need to look elsewhere for a job. That's a "reality that all merging companies have to face, but we will minimize the impact as much as possible," she said.
With little to excite or depress investors, the new firm's stock barely moved today on the Euronext exchange in Paris, where it traded down just 5 euro cents to €10.07, a drop of about 0.5 percent. On the New York Stock Exchange (NYSE) , the company at midday was flat at $13.28, giving it a market value of nearly $31 billion.
Despite these restrictions, Russo and Tchuruk found plenty to talk about.
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