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Alcatel-Lucent to cut extra 4,000 jobs after 3Q loss
PARIS - Alcatel-Lucent SA plans to slash another 4,000 jobs after the telecomunications equipment maker reported a third-quarter loss of $373 million on Wednesday.
CEO Patricia Russo, under pressure to produce better results, said the situation remains unsatisfactory. She also said the French-American company's chief financial officer will step down soon.
The job cuts are in addition to the 12,500 announced in February and together amount to 20 percent of the 82,500 workers employed by Alcatel and Lucent when they combined.
Wednesday's announcement is designed to save an additional 400 million ($578 million) by 2009, the company said.
Russo , who took over after France's Alcatel SA bought U.S.-based Lucent Technologies last November , denied reports that she had been given an ultimatum by the board, saying it is "fully supportive" of her plans to expand the current three-year, 1.7 billion euro ($2.45 billion) cost-cutting program.
The much-anticipated new plans include a slimmed down management team, a more streamlined core carrier business and a focus on higher-margin businesses.
"Volumes we are seeing are not what we expected," Russo said in a conference call. "These are difficult but necessary decisions, and we will manage these reductions with care."
She declined "at the moment" to specify where the new job cuts would take place. The company has already shed 5,000 workers this year.
Unions in France were planning a one-hour strike Wednesday to protest the bigger cutbacks. In the initial plan, France lost 1,468 posts, or 12 percent of the total.
Chief Financial Officer Jean-Pascal Beaufret said he will leave the company "in coming weeks." He will be replaced by Hubert De Pesquidoux, previously CFO of Alcatel North America.
The third-quarter loss of 258 million euros was slightly larger than analysts' expectations, and contrasts to a pro forma net profit of 532 million euros a year ago. Sales in the quarter slumped 11 percent to 4.35 billion euros ($6.27 billion), hurt by lower investments in U.S. wireless networks.
For the fourth quarter, Alcatel-Lucent said it expects a "solid ramp-up in revenue." But for the full year, revenues are likely to be nearly flat, the company said, admitting that the result is at "the low end of the range previously provided."
Alcatel-Lucent shares rose 1.4 percent to 6.72 euros ($9.68) in Paris after the announcement, but some analysts and investors voiced doubts about the new course.
Cheuvreux analyst Remi Thomas said Russo's plan is "not ambitious enough."
Revenue is falling short of expectations, and to compensate Alcatel-Lucent needs to make savings of 1 billion euros ($1.44 billion), he said. That is more than double Wednesday's announcement and would require an extra 10,000 job cuts, he said.
The Alcatel-Lucent merger was designed to boost margins through cost and research and development savings, while improving the joint company's pricing power with telecom operators, its largest customers. But intense competition in the industry means many of the savings have been used on discounts passed on to customers.
The slowdown in the telecommunications market has hurt other companies as well.
Swedish wireless equipment maker LM Ericsson AB posted a 36 percent drop in third-quarter earnings earlier in October. Ericsson blamed a decline in high earnings activities, such as mobile-network upgrades and expansions.
Nokia Siemens Networks, the troubled networks division set up by Nokia Corp. and Siemens AG, had an operating loss of 120 million euros ($170 million) in the third quarter.
http://www.philly.com/philly/wires/ap/news/state/new_jersey/20071031_ap_alcatellucenttocutextra4000jobsafter3qloss.html
PARIS - Alcatel-Lucent SA plans to slash another 4,000 jobs after the telecomunications equipment maker reported a third-quarter loss of $373 million on Wednesday.
CEO Patricia Russo, under pressure to produce better results, said the situation remains unsatisfactory. She also said the French-American company's chief financial officer will step down soon.
The job cuts are in addition to the 12,500 announced in February and together amount to 20 percent of the 82,500 workers employed by Alcatel and Lucent when they combined.
Wednesday's announcement is designed to save an additional 400 million ($578 million) by 2009, the company said.
Russo , who took over after France's Alcatel SA bought U.S.-based Lucent Technologies last November , denied reports that she had been given an ultimatum by the board, saying it is "fully supportive" of her plans to expand the current three-year, 1.7 billion euro ($2.45 billion) cost-cutting program.
The much-anticipated new plans include a slimmed down management team, a more streamlined core carrier business and a focus on higher-margin businesses.
"Volumes we are seeing are not what we expected," Russo said in a conference call. "These are difficult but necessary decisions, and we will manage these reductions with care."
She declined "at the moment" to specify where the new job cuts would take place. The company has already shed 5,000 workers this year.
Unions in France were planning a one-hour strike Wednesday to protest the bigger cutbacks. In the initial plan, France lost 1,468 posts, or 12 percent of the total.
Chief Financial Officer Jean-Pascal Beaufret said he will leave the company "in coming weeks." He will be replaced by Hubert De Pesquidoux, previously CFO of Alcatel North America.
The third-quarter loss of 258 million euros was slightly larger than analysts' expectations, and contrasts to a pro forma net profit of 532 million euros a year ago. Sales in the quarter slumped 11 percent to 4.35 billion euros ($6.27 billion), hurt by lower investments in U.S. wireless networks.
For the fourth quarter, Alcatel-Lucent said it expects a "solid ramp-up in revenue." But for the full year, revenues are likely to be nearly flat, the company said, admitting that the result is at "the low end of the range previously provided."
Alcatel-Lucent shares rose 1.4 percent to 6.72 euros ($9.68) in Paris after the announcement, but some analysts and investors voiced doubts about the new course.
Cheuvreux analyst Remi Thomas said Russo's plan is "not ambitious enough."
Revenue is falling short of expectations, and to compensate Alcatel-Lucent needs to make savings of 1 billion euros ($1.44 billion), he said. That is more than double Wednesday's announcement and would require an extra 10,000 job cuts, he said.
The Alcatel-Lucent merger was designed to boost margins through cost and research and development savings, while improving the joint company's pricing power with telecom operators, its largest customers. But intense competition in the industry means many of the savings have been used on discounts passed on to customers.
The slowdown in the telecommunications market has hurt other companies as well.
Swedish wireless equipment maker LM Ericsson AB posted a 36 percent drop in third-quarter earnings earlier in October. Ericsson blamed a decline in high earnings activities, such as mobile-network upgrades and expansions.
Nokia Siemens Networks, the troubled networks division set up by Nokia Corp. and Siemens AG, had an operating loss of 120 million euros ($170 million) in the third quarter.
http://www.philly.com/philly/wires/ap/news/state/new_jersey/20071031_ap_alcatellucenttocutextra4000jobsafter3qloss.html
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