Alcatel-Lucent to cut 5,000 jobs as it reports net loss of €254m

26 Jul 2012

Ben Verwaayen, CEO of Alcatel-Lucent. Photo via Wikimedia Commons

Telecom equipment maker Alcatel-Lucent is to cut costs and 5,000 jobs on a net loss of €254m for the second quarter.

The global economic slump and heightened competition were affecting profits, Alcatel-Lucent said, adding it would exit or reduce operations in markets where it was struggling.

Alcatel-Lucent revealed a restructuring plan today called The Performance Program, to achieve an additional €750m cost reduction, bringing total savings to €1.25bn by the end of 2013.

“Despite having demonstrated our ability to deliver operational profitability, it is clear from the deteriorating macro environment and the competitive pricing environment in certain regions challenging profitability that we must embark on a more aggressive transformation,” said Ben Verwaayen, CEO of Alcatel-Lucent.

Alcatel-Lucent has not specified from where the jobs will be cut. The company has a plant in Blanchardstown, West Dublin.

“These times demand firm actions, but as this will involve shrinking our employee base and exiting certain non-profitable contracts we will use The Performance Program to execute in a measured fashion,” Verwaayen said.

“However we are taking aggressive action that will improve our agility in the marketplace while remaining fully committed to both our customers and continuing to deliver world-class innovation.”

The company reported revenue of €3.5bn for April to June, down 7.1pc from the same period last year.

The second-quarter net loss amounted to €254m, or 11 cents a share, compared with net income of €43m, or 2 cents a share, in the year-ago period.

Sales fell 7.1pc to €3.5bn, and second-quarter operating loss, adjusted for some items, totalled €31m, compared with a profit of €87m in the year-ago period.

Tina Costanza was a journalist and sub-editor at Silicon Republic