Alcatel-Lucent to eliminate 10,000 jobs, cut cost by €1 billion

Alcatel-Lucent SA plans to eliminate 10,000 jobs in order to cut cost by €1 billion ($1.3 billion) as part of newly appointed CEO Michel Combes plan to turn around the loss-making French network-equipment company

The job cuts represent about 14 per cent of Alcatel-Lucent's global workforce of 72,000 as of December 2012.

The Paris-based company will reduce 4,100 jobs in Europe, Middle East and Africa, 3,800 in Asia and 2,100 in the Americas, the company today said in a statement.

In France, the company intends to reduce around 900 positions in 2014 primarily in support, administrative and sales functions, as well as recruit 200 engineers and technicians.

By the end of 2015, the company transformation program could also result in internal mobility, transfers to partners and redeployment for approximately 900 employees whose jobs will be retained, inside or outside the company.

As part of its restructuring, Alcatel-Lucent plans to achieve fixed cost savings of €1 billion or more than 15 per cent of fixed costs by the end of 2015.

It hopes to achieve this by reallocating R&D investment to next-generation technologies which should represent 85 per cent of R&D spend in 2015, as opposed to 65 per cent today, reduce R&D spend in legacy technologies by 60 per cent, and reduce administrative, sales and support functions to bring SG&A costs in line with industry standards.

Alcatel-Lucent's new turn-around plan comes after it failed to stem losses even though it recently cut thousands of jobs and sold non-core assets. (See: Alcatel-Lucent to cut 5,000 jobs globally)

The Franco-American group, which been trying to cut costs for years in a bid to better compete against China's Huawei Technologies and Sweden's Ericsson, reported a profit in July 2012 for the first time in six years.

"We launched The Shift Plan in June to give Alcatel-Lucent an industrially sustainable future. The strategic choices we made have been validated by our customers. To carry out this plan we must make difficult decisions and we will make them with open and transparent dialogue with our employees and their representatives. The Shift Plan is about the company regaining control of its destiny," said, MichelCombes.

In France the industrial transformation will focus R&D activities on future technologies such as 4G and IP platforms, in particular with the creation of a new small cells competency center, an area of particular interest for the company. In terms of research, France will keep its focus on optics and strengthen it in mathematics, at the heart of next-generation network software.

Business activities in France dealing with service providers will be concentrated in two main sites – Villarceaux, south of Paris, which will become Alcatel-Lucent's primary R&D center in Europe and one of the world's largest R&D campuses, and Lannion, which will specialise in ultra-broadband mobile access and subscriber data management technologies.

Alcatel-Lucent, France's biggest phone-equipment supplier, has lost more than $10 billion since it was formed in 2006 through the merger of the French telecommunications infrastructure giant Alcatel and Lucent Technologies, a former unit of AT&T.