Lucatel: French Staff Not Safe
In a document filed with the Securities and Exchange Commission (SEC) , Lucent says it has received questions from its staff about the planned merger with Alcatel (temporarily named "Lucatel"). The document shows that Lucent employees are worried that the proposed 8,800 job cuts (10 percent of the combined staff) will affect them more than Alcatel's employees in France, a country known for its heavily regulated employment laws.
Lucent CEO Pat Russo, and the future CEO of Lucatel, responded to these questions during an all-employee broadcast made on April 4, as did the firm's COO, Frank D'Amelio, at a "Town Meeting" on April 3.
The document also provides a continental breakdown of where the combined staff -- Alcatel's 58,000 and Lucent's 30,200 employees -- are based: 38,200 (43 percent of the combined total) are in Europe, 26,900 (30 percent) are in North America, and 23,100 (26 percent) are in the rest of the world.
Not surprisingly, the majority of the European staff (33,500) are Alcatel employees, while most of the North Americans (17,900) are from Lucent.
One question in particular highlights a key concern of Lucent staff: "How can you take a fair and balanced approach when you consider the fact that it's almost impossible to lay anyone off in France? What if the majority of the 8,800 job cuts have to come from Lucent?"
In her response, Russo refutes the idea that French staff have less to worry about. "To the question about it being impossible to cut jobs in France, I would say that's absolutely flat-out not correct. If you look at the reductions that Alcatel has taken as a company and the number of jobs they've reduced in France, I would venture to say it's probably equal to what we've done as a company," the CEO stated during the staff broadcast.
"The processes are a bit more rigorous, and it may take a little bit longer. But nobody should conclude that we will make our decisions based on do-ability," she added. "We're going to make the decisions based on what's in the long-term best interests of the company, because there really isn't a country in this world that you can't reduce jobs… So concluding that all the reductions will come from Lucent is flat-out wrong. And concluding that there can't be any reductions in countries where it's tougher, is also flat-out wrong."
D'Amelio addressed the same flat-out concern during his presentation, where he faced the following question: "As we've seen in the last few weeks, it's very difficult to lay off people in France. So this 10 percent that you're talking about, is that going to be equally distributed between the companies or is 90 percent of it going to come from Lucent?"
The COO replied: "At this point in time, I can't tell you I know exactly how the spread's going to take place… This combined company is a global company. My guess is there'll be synergies that are spread, but in terms of what the mix will be, what the percentage will be, I can't say. But let me just give you some financial facts," stated D'Amelio, before tripping up over the extent of Alcatel's presence, about 9,000 staff, in North America. "Alcatel has roughly 10,000 employees today in North America -- 6,000 employees are in the U.S. They have 7,000 employees in China, just to give you a feel for the diversity, the broad geographic diversity of that company."
He later added: "In terms of how you get synergies, you don't want to be taking a lot of synergies in low-cost areas. You want to bias the higher-cost areas in terms of maximizing value, so clearly that'll be a consideration as we work our way through the process. But really, what will drive it is the business decisions, and based on those business decisions we'll see the output that'll generate the financial results."
D'Amelio also said that a new name for the merged company wasn't a certainty. When asked whether it was safe to assume that the combined company would take neither the Alcatel nor Lucent names, he said "No." He added: "The reason I said 'no' is Lucent and Alcatel both have lots of brand value today, depending on the marketplace that you're in... One of the things that we're looking at, is there a way to not necessarily do an 'or' but to do an 'and' and try to maximize the value that both brands bring. We're looking at all of our alternatives."
No, we're not sure what that means either.
— Ray Le Maistre, Flat-Out And/Or Editor, Light Reading