Alcatel Redefines Itself

Alcatel SA (NYSE: ALA; Paris: CGEP:PA) has regrouped its divisions, reducing their number from four to three, in an effort to cut operating expenses and position itself to be a more service-oriented business (see Alcatel Shuffles Its Pack).

Alcatel's calling its new market segments Fixed Communications, Mobile Communications, and Private Communications. But the company's quick to say nothing's being dropped. "We're not giving up any product areas," says spokesman Klaus Wustrack.

Instead, Alcatel's old divisions will be folded into the new structure, as follows:

Table 1: Alcatel Regrouped
Old division Included� Sales 3Q02 (millions) Now part of�
Carrier networking Broadband equipment, DSL gear, GSM infrastructure, applications software, voice switching, services � 1,720.00 Fixed communications and mobile
Optics Optical fiber and components for terrestrial and submarine applications � 704.00 Fixed communications
e-Business Enterprise handsets, voice and data networking equipment � 506.00 Private communications and mobile
Space and components Satellite equipment and non-optical components � 660.00 Private communications
Source: Alcatel financial announcements

Despite company assertions that nothing is being replaced by the new organization, the new groups rise amid ongoing changes and layoffs. Alcatel's declared plans cut its workforce another 28 percent by the end of 2003 -- reducing the census to 60,000 from the 84,000 it had at the end of June 2002. The ongoing process is being undertaken country by country and product line by product line, sources say.

"The implementation of this new organization is also an opportunity to better ensure a greater efficiency in the execution of the undergoing restructuring plan," Alcatel CEO Serge Tchuruk said in a press statement.

Wustrack confirmed reports that Alcatel employees had demonstrated against ongoing layoffs in Paris yesterday but declined to comment.

Alcatel's news recalls similar restructuring efforts at competitors such as Lucent Technologies Inc. (NYSE: LU) and Nortel Networks Corp. (NYSE/Toronto: NT) (see Lucent Clarifies Product Strategy and Nortel Adds Another Enterprise Chief).

Those companies have also hopped the enterprise bandwagon, citing opportunities to sell equipment to large financial organizations, governments and utilities, universities, and other organizations that run their own networks but aren't stymied by the telecom capex crunch facing North American and European incumbent carriers.

Wustrack says Alcatel earns about one-third of its revenues from sales to large organizations that don't fit the description of traditional service provider. The regrouping is also a chance to create new kinds of revenue, for example from vertical applications or value-added services for enterprise customers.

Alcatel and its rivals see a key marketing opportunity in offering "solutions" that encompass products from different divisions in a single sale and add in consulting and integration services, which many firms see as a differentiator for large suppliers.

Of course, the ultimate success of the strategy remains to be proven. In Alcatel's case, as with other suppliers, the ability to mine the enterprise space successfully will depend on the vendor's ability to provide products that fit specific demands. This ability can be questionable in the face of ongoing product and staff "rationalizations." — Mary Jander, Senior Editor, Light Reading
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gsenechal 12/4/2012 | 9:09:03 PM
re: Alcatel Redefines Itself I've seen that quote many times and I really like it.. Unfortunately, it's one of those fake quotes.

Jim Reed has done a fine job detailing the background on the fake quote at:

Bongiorno 12/4/2012 | 9:09:02 PM
re: Alcatel Redefines Itself Thanks
Looks from the info on the website like I'll just have to say
Quote from Anonymous British Soldier 1945
mcollett 12/4/2012 | 9:08:57 PM
re: Alcatel Redefines Itself You know, that quote was my favourite (Cdn spelling) too... until I found out that there is not evidence that Petronius ever said that.

The debunking of this particular quote was originally identified by an AT&T staffer, but his original page on this was deleted; someone else has retained its content on a new page though, at the URL below.

Too bad... just another myth.

Thanks for your time.


alcabash 12/4/2012 | 9:08:53 PM
re: Alcatel Redefines Itself I worked for Krish and he certainly deserves some criticism when it comes to integrating startups into AUSA. But at the time, Krish believed that Alcatel could not become a player in the data networking space by gobbling up small niche players and that these acquisitions were only experiments. Europe was pushing for more startups, not Krish.

Krish believed in SBC, AT&T, Sonet and ATM.
This is why Alcatel acquired Newbridge and that acquisistion was actually a success, the management paid sufficient attention to make sure that people would stay in Kanata and had sufficient autonomy.

Krish worked smart and reasonably hard but he is not a workaholic, he is a poweraholic. He uses and manipulates people to reach his goals. The guy is so smart that it worked most of the time, he thought it would work forever.

Metropolitian 12/4/2012 | 9:08:50 PM
re: Alcatel Redefines Itself Mellonhead wrote:

"Krish was famous for his 42 hour work weeks. I
remember reading, in amazement, in both internal
and external publications where he could not
understand colleagues need for working 50, 60
and perish the thought 70+ hour work weeks."

An employee putting in a lot of hours is not necessary a good employee.

I have seen a lot this and quite often there is other reasons than purely a dedicated employee.

1) Companies that pay engineers overtime, get employees to do a lot of overtime, whether it is needed or not. I have seen people pay off cars and houses quickly this way.

2)Inefficent employees do a lot of overtime, since they waste much time repeating previous mistakes and doing all their assignments serially.

3)Social butterflies that are gabbing all day at the water cooler, find they have to do overtime to get their actual work done.

Ironically, one of the most efficent people I ever met (a role model for "The seven habits of highly effective people") was considered a slacker by his management because "he only did 40 hours a week"

The person would arrange his schedule every morning, so that he had at least 10 things running in parallel (e.g. Chip simulation, system BER tests, file downloads, schematic printing, etc. ) every day.

Before he started a project he would call on people who did similar projects in the past and learned all the mistakes as well as the right things they did.

This person was let go at Nortel a year ago because "he did not put in the hours like everyone else", while the useless management still persists.

So, I would not fault Krish for not putting on the "I am so busy" act. At least he is honest.


God 12/4/2012 | 9:08:47 PM
re: Alcatel Redefines Itself "In addition, Alcatel bought a number of Bay Area Companies of Indian origin that were a complete flop."

Now that's a pretty racist statement ...

photon_mon 12/4/2012 | 9:08:46 PM
re: Alcatel Redefines Itself God wrote:

"This happens at Alcatel every year. It's amazing that they can keep coming up with new organizational structures

The best way to think of it is as a tree full of birds. When you stand under the tree and clap your hands, all the birds will fly away amid a lot of noise. When you come back an hour later, all the birs are back, but they sit on a different branch"


Great analogy, God. But what perplexes me is WHY
you allow these things to happen in the first

(Forgive me, after all it is Friday ;-)
the_lord 12/4/2012 | 9:08:18 PM
re: Alcatel Redefines Itself
Would it be any less of a racial of statement if we also pointed out that of all the CEOs from those acquired companies had significant weight problems!?!?!?!


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