Alcatel-Lucent, the world's largest maker of telecommunications equipment, on Friday said it plans to cut 1,000 management jobs as part of an effort to save €1 billion ($1.33 billion) over the next two years.

In addition, it would also shed 5,000 contractors as it gave a pessimistic forecast for 2009. The new measures bring job cuts to 17,500 since Alcatel SA bought Lucent Technologies Inc. in 2006. (See: Alcatel-Lucent may axe up to 12,500 jobs)

Adjusted operating profit will be around break even next year, the Paris-based company said in a statement today. Analysts on average predicted a profit of €889 million euros. The telecommunications equipment market will slump 8 per cent to 12 per cent next year at constant exchange rates, Alcatel-Lucent said as it announced CEO Ben Verwaaye's plan to turn the company around.

Nokia Siemens Networks, a Finland-Germany joint venture, said last week that it expected a drop of 5 per cent or more in the equipment market and Ericsson of Sweden has said a flat market is likely.

Verwaayen, hired in September, has overhauled management after Alcatel-Lucent lost €4.84 billion since the merger. The company has suffered from write-downs in the wireless-equipment business, restructuring costs and lower spending by clients including Sprint Nextel Corp.

Alcatel-Lucent said its market share is set to be stable in a shrinking 2009 market and that it aimed to cut research and development costs and general expenses by €750 million on an annualized basis by the fourth quarter of the year.

''We are going to shift to the next generation platforms and on the more mature platforms, we'll either work with others, or we'll reduce spending substantially,'' the CEO said. He said the research strategy aimed at reinforcing Alcatel-Lucent's strong position in fixed technology like internet protocol, optics, broadband fixed access and CDMA-EVDO, a type of 3G mobile technology.

Verwaayen said the group would exit the mobile WiMax business, which gives portable devices access to wireless signals where no fixed network exists, notably in areas of low population density. "When it's all said and done, it's about preserving the balance sheet.''

Analysts have long been urging the group to slash spending on mature and loss-making technologies in order to preserve cash until it can benefit from an upturm and a return to spending by its operator clients.

Following the $34 billion transatlantic 2006 mega-deal that formed the group, the company is now worth $5.8 billion. Its shares have lost 62 per cent so far this year after a 55 per cent decline in 2007.