Alcatel-Lucent to axe 4,000 workers

31 Oct 2007

Newly merged communications giant Alcatel-Lucent has revealed that it is to cut 4,000 additional jobs by 2009 as its integration continues.

The company said that already 5,000 positions have been cut in the last year and that in the fourth quarter some 1,000 positions will go.

“These are difficult but necessary decisions, and we will manage these reductions with care,” commented Alcatel-Lucent chief executive Pat Russo.

“With this plan, the company is targeting gross margins in the high 30s and operating margins of 10pc or better in the post integration phase beginning 2010.”

For the third quarter Alcatel-Lucent reported revenues of €4.3 billion and a gross profit of €1.4 billion.

Net loss at the combined company amounted to €345 million, or 15 cents per diluted share.

Russo said he believed the company’s strategy, product portfolio and expertise are aligned with market drivers that will underpin the industry for the next several years as networks migrate to an all-IP based architecture.

“During the first nine months of operations as a single company, we strengthened our position in key strategic markets and technologies such as IP and mobile broadband required to position the company for long-term sustained growth,” Russo explained.

“Having said that, and in spite of the promise of this industry and the long term benefits of the merger, we recognise that market conditions remain difficult, with continued pressure on revenues and margins due to intensified competition and some slowdown of spending in North America.

“These market conditions along with our commitment to transform the company for the long term lead us to put in place an aggressive three-part plan to improve profitability and reposition the business,” Russo said.

By John Kennedy