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Alcatel-Lucent to Reduce Staff by 12,500
Feb 2007
PARIS, Feb. 9, 2007 -- Alcatel-Lucent will cut 12,500 jobs -- 16 percent of its staff -- as a result of its recent merger and lower-than-expected first-quarter profits, it said today in a statement. Workers at Alcatel-Lucent have called for a strike on Feb. 15 to protest against the job cuts, which were previously expected to amount to 9000, or 11 percent of staff. The company provided no further details on the downsizing.

"The cuts will be discussed at each level in each country with organizations representing employees at Alcatel-Lucent," Finance Director Jean-Pascal Beaufret said during a conference call with analysts.

The Paris-based group incurred a net loss of 618 million euros ($802.3 million) in the three months to December 31, including exceptionals of 755 million euros, compared with a profit of 381 million euros a year earlier. It said disruptions from Alcatel's acquisition of its US telecoms equipment rival Lucent should ease over time and the newly combined business should lift full-year revenues by at least 5 percent.

"We expect that we will resume growth after a challenging first quarter ... as short-term uncertainties and distractions from the merger are mitigated," Russo said.

"In summary, while skepticism is likely to remain, we feel management has given some comfort that the issues faced by Alcatel-Lucent are short-term rather than structural," Deutsche Bank said in a note.

Alcatel-Lucent said it now expected pre-tax savings of 1.7 billion euros over three years, up from 1.4 billion euros previously. It said a substantial majority of the savings would be achieved in the first two years and 55 percent would be jobs-related.

"There are still 40 percent more jobs cut than announced (previously), which proves that there are some difficulties that had not been foreseen," Jean-Baptiste Triquet, a member of the CFDT union, told Reuters today.

The job cuts come after Canada's Nortel Networks, from which Alcatel has acquired its UMTS mobile access unit, said on Wednesday it would slash 2,900 staff, or 8.5 percent of its work force over the next two years.

Alcatel-Lucent estimated its would spend on the restructuring some 1.6 billion euros in cash, of which 900 million euros would be disbursed in 2007.

In the fourth quarter, Alcatel-Lucent made an operating profit of 21 million euros on 16 percent lower fourth-quarter revenues of 4.421 billion euros.

“This is the first quarter that Alcatel-Lucent is reporting results as a combined company,” said Russo. “While the results for the fourth quarter are clearly disappointing, the positive long-term benefits of the merger and the growth potential of Alcatel-Lucent remain as envisioned. Since we began operating as a combined company on Dec. 1, 2006, we have made progress against our integration plans, and we expect to increasingly recognize the benefits of our integration over the course of the year.

“Our newly combined company is focused on supporting the overall transformation occurring in our industry. This includes the transformation of networks to all-IP, video and multimedia content to enhance communication services, broadband mobility as well as high value services,” she added.

“We have now finalized Alcatel-Lucent’s product portfolio and aligned it with these key areas as evidenced by our investments in IMS, 3G mobile networks, services, next-generation optical, as well as wireless and wireline broadband access,” she said. “This is a strong portfolio that we intend to leverage across fixed, mobile, converged and enterprise opportunities to grow our business and gain market share over time. In fact, we’ve recently announced contracts with Softbank Mobile in Japan to deploy a 3G UMTS/HSDPA solution and with Globacom in Nigeria to provide fixed and mobile networks as well as next generation, IP/MPLS and optical network solution.”

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