Alcatel-Lucent cuts 10,000 jobs in ‘last chance’ to turn firm around

Telecom equipment maker Alcatel-Lucent announced plans yesterday to cut 10,000 jobs worldwide in what its chief executive called a last chance to turn the company around from heavy losses.

The product of a 2006 Franco-US merger, Alcatel-Lucent told a European works council meeting it intends to axe nearly one in seven of its employees. Some 4,100 posts will go in Europe, the Middle East and Africa, 3,800 in Asia Pacific, and 2,100 in the Americas.

This is the latest step in a plan announced in June to focus on high-growth areas ranging from 4G mobile to high-speed broadband, and to lower fixed costs by more than 15 per cent, saving €1 billion.

Chief executive Michel Combes said in a statement: "Everyone knows this plan is the last chance. The company is in a very serious situation."

Including past measures, the total cost of the plan is €1.2 billion, an amount the company expects to fund through asset sales.

Shares in Alcatel rose 2 per cent in early trading. The stock has almost tripled in value this year on buyers' hopes Mr Combes, a former CEO of Vodafone Europe, can shore up the business.

The group, which employs 72,000 staff worldwide and competes with larger rivals Ericsson of Sweden, China's Huawei and Finland's Nokia, has posted five straight quarters of net losses.

France’s CFDT union said it would fight the plan that entailed cuts to about 15,000 posts, although 5,000 new jobs will be created.

The Alcatel-Lucent merger was an attempt to pool resources but any savings were lost due to fierce competition in the sector and as slow economies, particularly in Europe, dented demand for telecom equipment.

Last year it swung to a net loss of €1.2 billion – the biggest since 2008 – largely because of a writedown on its mobile unit and restructuring costs from an earlier plan to lay off 5,000 workers. – (Reuters)