Alcatel-Lucent To Cut 10,000 Jobs In Turnaround Plan

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

Follow on: Google +

Networking equipment maker announces job cuts amid reports of potential Nokia alliance

Loss-making telecommunications equipment maker Alcatel-Lucent confirmed on Tuesday that it plans to cut 10,000 jobs worldwide by 2015, as part of a plan under new chief executive Michel Combes to return the company to profitability.

The company is the latest in its sector to introduce significant job cuts and follows Nokia’s announcement of 17,000 job cuts two years ago and Cisco’s announcement in August that it would slash its workforce by 5 percent. Alcatel-Lucent itself has gone through multiple previous rounds of job cuts in recent months, but on a smaller scale.

Possible Nokia deal

Nokia is in the process of refocusing around its networking equipment manufacturing operation, following the recent sale of its struggling handset business to Microsoft, and industry observers have suggested that as part of that shift it could be planning to form an alliance with or acquire Alcatel-Lucent. The latest cuts by the French company could be seen as a way of slimming down the company ahead of deals to sell off assets or the entire company to Nokia, according to analysts.

ben wervaayen alcatel lucentThe cuts represent about 7 percent of Alcatel-Lucent’s entire workforce, which currently stands at about 68,000, down from roughly 72,000 at the beginning of this year.

About one-third of the company’s workforce is in Europe, with another third in the Asia-Pacific region and about one-quarter in the US, where it runs the Bell Labs research facility. The majority of the cuts will fall in the EMEA region, where 4,100 will be affected, including 900 in France, where another 900 are to be shifted to other jobs internally or to other companies. The cuts will involve the closures of sites in Rennes and Toulouse.

Another 3,800 positions will be axed in Asia and 2,100 in the Americas. In total the company plans to cut 15,000 jobs, while creating another 5,000 in growth sectors such as Internet routing.

Combes had already laid out the broad outlines of his “Shift Plan” turnaround effort in June, after taking office in April, but on Tuesday laid out the scale of the job losses the plan is to entail. The company is planning to sell off 1 billion euros (£845m) of assets and cut 1 billion euros in costs.

“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,” Combes said in a statement.

Combes on Tuesday met with union representatives, following a meeting on Monday with Fleur Pellerin, France’s minister for digital industries. The union CDFT said in a statement it would oppose the plan and would appeal to the government to stop the job cuts.

Alcatel-Lucent’s shares are up by 175 percent since Combes took over as chief executive earlier this year, closing on Monday at 2.89 euros per share, but are still about 97 percent down from their peak in 2000. The company’s losses since its creation by the merger of France’s Alcatel and the US’ Lucent in 2006 exceed $10bn (£6.3bn).

Alcatel-Lucent’s main competitors, aside from Nokia, include Sweden’s Ericsson, which is the largest manufacturer of mobile phone networking gear, and China’s Huawei and ZTE.

Do you know all about 4G and the mobile future? Take our quiz.