Alcatel-Lucent may axe up to 12,500 jobs

Mumbai: French-American telecom equipment maker Alcatel-Lucent is planning to cut up to 12,500 jobs after registering a fourth quarter loss against profit expectations.

Earlier this week, the web edition of the weekly L'Expansion had reported that the company may have to axe nearly 20 per cent of its workforce. (See: Alcatel-Lucent may cut up to 20,000 jobs)

The recently merged Alcatel-Lucent, which only last month issued a profit warning, reported a net loss of €618 million ($802.3 million) in the three months ended December 31, 2006, compared with a profit of €381 million a year earlier. The company also forecast a sales drop in the first quarter as tough trading and uncertainties related to the tie-up took their toll.

Announcing the first combined results for the two companies since they started operating as a merged entity on December 1, the company said it expected full-year revenues to grow at least by five per cent, in line with the telecom carrier market.

Paris-based Alcatel-Lucent said it expected pre-tax savings to total €1.7 billion euros over three years against the previous estimates of 1.4 billion euros. It proposed a dividend of €0.16 euro a share for 2006.

"These figures are disappointing indeed, but the fourth quarter does not reflect the benefits of the tie-up between Alcatel and Lucent and the growth potential of our company today," finance director Jean-Pascal Beaufret said.

"We have suffered from tough trading conditions, namely in North America as many of our clients there are consolidating, so when they merge they delay certain investments," he added.

The company declined to say by how much it expected revenues to decline in the first quarter.

Alcatel-Lucent said it now plans to shed a total of 12,500 jobs over the next three years, instead of the 9,000 originally announced, even as workers at Alcatel-Lucent have called for a strike on 15 February to protest against the job cuts.

The company, however, gave no details of where the cuts would be made.

"These are difficult but necessary decisions, and we will manage these reductions with care," chief executive Patricia Russo said in a statement, adding that the job losses and other additional cost-cutting measures will increase the synergies.

Althogh sales are likely to fall further in the first quarter, Russo said full-year 2007 revenue will return to single-digit growth. "We have now finalised Alcatel-Lucent's product portfolio," she said.

Shares of Alcatel-Lucent rose 2.8 per cent to €10.43 ($13.55) in Paris. The stock had plunged 8.5 per cent on January 23, after the company flagged the revenue slide and warned that fourth-quarter operating profit was "approximately at break-even."