Alcatel-Lucent foresees bleak future as its sheds workforce

12 December 2008

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.