Alcatel-Lucent job cuts deepen after loss
NEW YORK (MarketWatch) -- Alcatel-Lucent said Friday that it will eliminate an additional 3,500 positions, on top of 9,000 job cuts already announced, after the telecommunications-equipment maker posted a fourth-quarter loss and forecast a drop in first-quarter sales.
The French-American company, which completed a trans-Atlantic merger in December, blamed stiff competition in the wireless market and a shortfall in North America , where large phone companies have scaled back equipment purchases.
Like other equipment providers, Alcatel and Lucent have struggled to drive growth since the end of a global technology boom seven years ago. The two companies had hoped that their pooling of resources would allow Alcatel-Lucent to rise above the competition and solidify its position as the No. 1 network vendor in the world.
Some big phone companies, however, are putting off purchases until they find out which duplicate product lines Alcatel and Lucent intend to phase out. Rivals, for their part, are trying to take advantage of the uncertainty surrounding the merger to steal market share.
"Competitors always seek to find openings where they perceive there may be some disruption, and we are dealing with that," Chief Executive Patricia Russo said on a conference call with analysts.
Alcatel-Lucent had originally said that it would cut 9,000 jobs over three years. The newly proposed 12,500 reduction in jobs would represent about 16% of the company's global workforce, though Alcatel-Lucent hasn't specified where cuts will take place.
The job reductions are expected to generate pretax savings of 1.7 billion euros ($2.2 billion) over three years, up from an original target of 1.4 billion euros, Alcatel-Lucent said. At least 600 million euros of those savings will take place in 2007.
"These are difficult but necessary decisions, and we will manage these reductions with care," Russo said. "We are committed to serving our customers' needs with a competitive cost structure and effective operating model."
Ronald L Kellogg
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