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Alcatel-Lucent to Cut 10,000 Jobs

Ray Le Maistre
10/8/2013
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Alcatel-Lucent is to reduce its global workforce by 10,000 by the end of 2015 as part of the Shift Plan restructuring program unveiled earlier this year by new CEO Michel Combes.

The CEO outlined his plan in June, when he laid out the vendor's new product portfolio roadmap (focused around IP) and said that annual fixed costs would be cut by €1 billion (US$1.36 billion, or 15 percent of the current run rate) by the end of 2015. That operating cost cut was always going to include job reductions, but no details were revealed in June as discussions were still going on with staff representatives. (See Alcatel-Lucent Unveils Shift Plan and Alcatel-Lucent Builds Future Around IP.)

Now Alcatel-Lucent has revealed that those savings will be achieved by:

  • Re-allocating R&D investments to next-generation technologies (IP platforms, mobile broadband, optics, and software), which will account for 85 percent of total R&D spending in 2015, compared with 65 percent currently.
  • Reducing R&D spending in legacy technologies by 60 percent.
  • Reducing headcount.

The vendor had already cut 7,500 jobs during the first half of 2013, taking its global headcount to around 65,000 by the end of June this year. Now, more than 15 percent of that global workforce will be made redundant, with the cuts hitting all geographies, including France. Here's where the axe will fall:

  • 4,100 staff in Europe, Middle East and Africa (EMEA) will lose their jobs, including 900 support, sales, and administrative staff in France.
  • 3,800 in Asia/Pacific.
  • 2,100 in the Americas.

The company also plans to recruit a few hundred staff in France as it focuses its European R&D operations in Villarceaux, south of Paris, which will be "one of the world's largest R&D campuses," according to AlcaLu. Another site in Lannion, France, will focus on mobile broadband (particularly small cells) and subscriber data management (SDM) developments.

Now the pressure will be on Combes to execute the strategy and turn the vendor into a profitable organization while retaining relevancy and market share in key technology sectors: The market will be particularly focused on whether AlcaLu can build on its lightRadio developments and be a major player in small cells and 4G/5G. The company's lack of focus and confusing radio access network (RAN) portfolio has hampered its developments in recent years, leaving Ericsson AB, Huawei Technologies Co. Ltd., and Nokia Solutions and Networks (NSN) to lead the market, though AlcaLu is not without its 4G successes and has struck a notable partnership for small cell developments. (See AlcaLu's Small Cell Menu: Stake and Chips.)

Now AlcaLu faces the same challenge as NSN did in late 2011 -- to clearly communicate and act upon a restructuring strategy that results in a leaner and more viable company. There are signs now that NSN, which shrunk its product portfolio and cut more than 17,000 jobs, has turned a corner and is on the path to corporate recovery, while ALcaLu still has plenty of work to do on that score. (See NSN: The Recovery Looks Real and Charges Slam AlcaLu's Q2.)

The investment community has welcomed the restructuring details. AlcaLu's share price is up by 1.4 percent to €2.93 Tuesday morning on the Paris exchange and is up nearly 188 percent since the start of the year, which was pretty much the company's nadir.

— Ray Le Maistre, Editor-in-Chief, Light Reading

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phaek.bob
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phaek.bob,
User Rank: Light Beer
12/4/2013 | 7:15:42 PM
Let's all rush out and buy their stock!
You know, because when a company announces a huge layoff - it's not that they've SO BADLY MISMANAGED THEIR COMPANY that they've been forced to lay people off - it's that they're DOING SOMETHING.

 

Instead of firing the jackwagons who were FAILING - no, they fire the workers, give themselves bonuses, and then continue to run the company into the ground, and you greedy stockholders don't give a rat's furry behind because your stocks went up.  For a bit.  Before they crashed. 

But oh - the next company that has to fire most of its staff will be completely different, won't it?
phaek.bob
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phaek.bob,
User Rank: Light Beer
12/4/2013 | 7:11:29 PM
"Shift Plan restructuring program"
Shift Plan restructuring program - also known as the STEAL THE EMPLOYEE'S PENSION FUNDS, FIRE MOST OF THEM, OUTSOURCE THE JOBS OUT OF THE U.S. AND DEFINITELY INCREASE THE MILLIONS IN BONUSES TO THE EXECUTIVE BOARD program.

It's the Republiturd Way, ya know!
macster
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macster,
User Rank: Light Bulb
10/10/2013 | 3:48:32 PM
Re: Mobile portfolio clarfication
"Let's hope this all works out - the industry doesn't need another major casualty. It's bad enough that so many are losing their jobs."

Couldn't have worded it better. I wonder how this impacts that "industry positiveness" survey, that recent article?

 
sam masud
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sam masud,
User Rank: Light Sabre
10/9/2013 | 2:24:45 PM
Re: Will these steps be good enough for ALU to turn around ?
Yup, that's how these guys and their pals (Cisco) do things. You say cynicism, they say market realism. I say incompetence.
Ray@LR
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[email protected],
User Rank: Blogger
10/9/2013 | 6:25:56 AM
Re: Innovation
THis is just my view.... 

 

The company ius certainly onto something with lightRadio but that's not enough - it has lost ground in terms of scale and entrenched deployment compared with its main rivals because it dithered for so long over its technology and product portfolio choices - it lost the plot in 3G and that has hampered its broader 4G potential.

the reason people have, a number of times, considered NSN and ALU to be a decent fit, on paper, is that NSN has the mobile portfolio that could really complement the rest of ALU's business.

So ALU has innovation, for sure, but its post-merger diddling in mobile really weakened its position. 

I'm more than happy to have folk come on this message thread and tell me I am wrong about this, but....

 

 
DOShea
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DOShea,
User Rank: Blogger
10/8/2013 | 8:33:45 PM
Innovation
I thought there was some consensus that with lightRadio AlcaLu was returning to its innovative roots. Is the broader corporate restructuring a step backward for innovation? I know it will be distracting, but the recruitment of the new jobs in France and how they will be deployed makes it sound like maybe not.
RolfSperber
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RolfSperber,
User Rank: Light Beer
10/8/2013 | 1:40:15 PM
Re: Will these steps be good enough for ALU to turn around ?
You are perfectly right! As a former AlcaLu employee I am fully aware of the flab the company built up. They always kept those administering the administration of the administration and laid off technical experts. The fact that they are going to cut 15,000 jobs and create 5,000 new ones is just cynical. Among those 15,000 there is enough know how to cover the requirements of future IP centric networks. For my former colleagues I do hope that AlcaLu will survive.
Ray@LR
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[email protected],
User Rank: Blogger
10/8/2013 | 11:34:12 AM
Is ALU + NSN still a topic of debate I wonder?
Just going to hammer home my point made here

ALU + NSN: A Reality Check


http://www.lightreading.com/author.asp?section_id=252&doc_id=705826

 

I trust that all thoughts of bringing together one large cmpmany that has just survived a massive restructuring with a company about to undergo open heart surgery will now be put to rest.
Carol Wilson
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Carol Wilson,
User Rank: Blogger
10/8/2013 | 8:48:23 AM
Re: Mobile portfolio clarfication
The clear messaging piece is essential - I agree, Ray. When major players are going through these painful transitions, they become too internally focused and customers aren't often treated well -- and by that I mean given a clear  understanding of what is going to happen. That, of course, creates an information vacuum, which competitors are more than happy to fill.

Another Nortel-style disaster, the death of a thousand cuts, helps no one.
Ray@LR
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[email protected],
User Rank: Blogger
10/8/2013 | 6:28:27 AM
Mobile portfolio clarfication
What ALcatel-Lucent really needs is full clarification of its mobile network technology portfolio. Sure it's developing small cells etc but what does it have RIGHT NOW in terms of RAN, backhaul and packet core options?

 

And I wonder what these moves will do to customer confidence in the company? Info on the fate of its legacy portfolio needs to be hitting the streets right now.

 

Let's hope this all works out - the industry doesn't need another major casualty. It's bad enough that so many are losing their jobs.

 
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