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Lucent Cuts Target INS

Lucent Technologies Inc. (NYSE: LU) has been sharpening its knife again, and this time the target of layoffs and progam cuts appears to be in its Integrated Network Services (INS) division.

Several sources close to Lucent have told Light Reading that there was a substantial layoff in INS last week. The cuts may have included hundreds of people, they say.

INS is the division of Lucent focused on carrier wireline networking. Despite a rebound in Lucent's corporate profits, most of the gains have come from Lucent's wireless networking division and the INS division has been a long-term money loser. In Lucent's third fiscal quarter, revenues in INS shrank by 3 percent sequentially (see Lucent Continues Down Profit Path).

Lucent won't comment on layoffs other than to say the company expects to continue adding and dropping people "as part of normal business operations."

But employees at INS say last week's layoffs had a particularly bad effect on employee morale, mostly because Lucent has been saying that its restructuring effort is largely over.

"Thursday was an ugly day," recalls one Lucent employee who asked to remain unnamed. "On Tuesday, Pat [Russo] was on MSNBC saying the restructuring was done. Things couldn't be further from the truth. At least Nortel is telling people what they are doing."

The layoffs give further evidence that Lucent is still retreating from some core product areas in telecom networking. Some sources say the INS cuts are particularly deep and will likely leave many products on life support. Some sources also say the cuts may end in the discontinuation of Lucent's CBX 3500 product.

The end of the CBX 3500 would be big news, because it's been billed by Lucent as an important update to its ATM switch family, the CBX 500, which hadn't seen a major new release since 1999.

At Supercomm earlier this year, Lucent unveiled the new CBX 3500 with much fanfare (see Lucent Joins the Edge Crowd and Lucent Launches CBX 3500). Lucent's long-term strategy was to tie the CBX 3500 in with IP routing products from Juniper Networks Inc. (Nasdaq: JNPR) through a co-development agreement.

If Lucent is contemplating an end to the CBX 3500, it could be that it has decided it can accomplish the same goal via the partnership with Juniper. Experts debate whether a Layer 2 multiservice switch and Layer 3 edge router are redundant products, saying that routers could eventually take over all the functions of a multiservice Layer 2 switch.

"There is an issue of redundancy, because Lucent also has Juniper as a partner," says Frank Dzubeck, president of Communications Network Architects. "You have an edge product where your product has an edge product. If your partner is making more of an impact, you have to ask yourself why you are funding a product yourself."

Dzubeck, however, doesn't believe that Lucent would kill the product outright. If they have decided it's redundant, they may simply stop investing in it. "Nobody cuts anything anymore," he says. "They just let it die."

Another source close to Lucent says that is exactly what is happening. He says that recently there were only about 40 engineers left in the CBX division, though it's unclear how many of those were affected by last week's cuts.

Some analysts have speculated that more cuts were coming at Lucent, and, given that its INS division has lacked growth in recent quarterly results, it's the place one would expect the cuts to come (see Report: More Lucent Cuts Ahead? ).

A Lucent spokesman insists the CBX 3500 is not being canceled. "The CBX3500 is generating interest from our customers, and we have shipped to customers," he says. "Anything you're hearing about the switch otherwise is false."

Lucent said recently that it is largely done with its corporate restructuring program, but it continues to reduce headcount. As of the end of August, Lucent's headcount stood at about 32,300. Lucent had 35,000 employees at the beginning of the year.

— R. Scott Raynovich, US Editor, and Craig Matsumoto, Senior Editor, Light Reading

atmforever 12/5/2012 | 1:14:44 AM
re: Lucent Cuts Target INS Layoffs last thursday at INS ????

It is apparent that layoffs are coming soon and many will lose jobs but it is not done yet. Check your unnamed sorces.
Lighter-Fluid 12/5/2012 | 1:14:41 AM
re: Lucent Cuts Target INS Convergence Solutions would be one example spanning across naperville/missouri/columbus
And people like Geary just change hats.
If I was the LU spokesperson, I'd have no comment too.
Or, to directly quote, it's part of "normal business operations"

L-F

tohaveandhavenot37 12/5/2012 | 1:14:36 AM
re: Lucent Cuts Target INS Here is CB FMP number from lucent5-5 MB:

Date: Mon Sep 27, 2004 10:54 am
Subject: Columbus FMP

From a current employee:

Re: CB Lucent FMP on 9/23

Heard the following numbers this morning:
Switching 21
Messaging 10
E of M 4
orange 12/5/2012 | 1:14:34 AM
re: Lucent Cuts Target INS I believe the gist of this article is correct, but the details that I've heard are a little different. And yup I fully admit this is second hand info and only concerns the ex-Ascend org and their close relations. Lucent may or may not be reducing headcount but they are still laying off US based engineers and replacing them with offshore ones. As someone else posted earlier all of PSAX (Landover,MD) was handed their notice this summer. They have until Dec. to train their replacements in Bangalore. Talk about motivated employees. The current layoffs in Westford are on the other side of the street from CSD and are no more than the regular quarterly LWS cuts. Gotta keep in pratice. All of the software development for the ex-Ascend products will be moved to India once the CBX3500 ships this winter. But this is the first I've heard of the 3500 being cancelled but it would not surprise me. God I'm glad I'm outta there.

Lighter-Fluid 12/5/2012 | 1:14:32 AM
re: Lucent Cuts Target INS
Cyclical layoffs, cancelled & off-shored products aside, the union is due to strike at the end of next month.
There will be zero revenues when there's no one to deploy and install the equipment...CBX, APX, PSAX, or otherwise.

L-F
marete 12/5/2012 | 1:14:31 AM
re: Lucent Cuts Target INS
Are the ASICs being designed at Westford?
manoflalambda 12/5/2012 | 1:14:12 AM
re: Lucent Cuts Target INS From the internal e-rag -->

[NOTE TO LUCENT EMPLOYEES -- This story concerns me because it is inaccurate and I want to make sure we're on the same page regarding the issues it raises. First, our restructuring is behind us -- that means the plans we put in place and announced when we announced our restructuring charges are in fact complete. We have always said that we would manage the business based upon the realities of the market, which means there will be additions in some areas and reductions in other
areas of the business. In fact the reductions referred to in the story were tied to the circuit switching business -- a business that while very important is a business in decline and as a result needs fewer people. It's important that everyone understand that we will continue to add and reduce headcount based on the needs of the business and market dynamics. I've said that on employee broadcasts and most recently I said it last Tuesday on CNBC. This is how we must run the business going forward.

Finally, it's misleading and incorrect to speculate that we are backing away from the CBX 3500. It is a key piece of our portfolio going forward based on the opportunities we see in the market and conversations we are having with our customers. This product is targeted at customers who are enhancing their edge networks to support profitable Frame Relay and ATM services as well as new Ethernet and IP/MPLS services. Our partnership with Juniper Networks lets us sell their edge routers to carriers who are tuning their networks primarily to support IP services. There's room for both products in our portfolio because they address different customer needs to evolve edge networks to suit their different business models. -- Pat Russo]

Salute,
Manoflalambda
Scott Raynovich 12/5/2012 | 1:14:05 AM
re: Lucent Cuts Target INS FYI, LR is working on a follow-up story as more details are emerging. If anybody has new info please give me a call at 212 925-0020 x103.

Also, I am looking for confirmation that the "memo" posted below is real.

--Scott
flam 12/5/2012 | 1:13:54 AM
re: Lucent Cuts Target INS Also, I am looking for confirmation that the
"memo" posted below is real.


Its appearance is consistent with a cut/paste
off the infernal (pun intended) website
today.lucent.com.

All my contacts have left the Lu, mostly on to
better things, so I can't confirm that this is
a real note off that site.

But the phrases below indicate to me that this
was written by someone very skilled in Lucent
double-speak - unfortunately you can infer
that either a victim - sorry employee - or an
executive wrote this BS.

"I want to make sure we're on the same page"
"restructuring is behind us"
"market dynamics."
"key piece of our portfolio going forward"

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