ALCATEL-LUCENT will cut 5,000 jobs after slumping to a loss, a sign that the effort by chief executive Ben Verwaayen to revive the company is losing steam and sending the stock to its lowest level since at least 1989.

France’s biggest phone-equipment supplier said yesterday it would save an extra €750 million with the cuts, equal to about 6 per cent of staff. The company, which in 2011 posted an annual profit for the first time in five years, fell to a loss of €254 million in the latest quarter.

Heading into his fifth year as chief executive, Mr Verwaayen is accelerating his turnaround bid after thousands of job cuts, restructuring and asset sales failed to make the company profitable.

Still reeling from the 2006 purchase of Lucent Technologies, which boosted costs, Alcatel is also coping with plunging sales to European carriers and price competition from Asian vendors such as Huawei Technologies.

Alcatel-Lucent stock has lost more than 80 per cent since Mr Verwaayen took over as chief executive in 2008, plunging 31 per cent this year alone. At €1.9 billion, the company is now worth about one fifth of the $11.6 billion that Alcatel paid to acquire Lucent.

Its biggest European rival, Stockholm-based Ericsson, is worth about 205 billion kronor ($29.8 billion).

Alcatel-Lucent, rated junk by Moody’s Investors Service and Standard & Poor’s, said its net cash shrank by €517 million in the period to €236 million.

Mr Verwaayen addressed workers yesterday in an internal conference call and will have to meet union representatives next in some countries, including France. Management must inform labour unions about plans to reorganise, which often leads to protracted negotiations with employees.

Productivity at Alcatel trails Ericsson, whose sales per employee were 19 per cent higher last year.

Analysts project that Ericsson’s profit margin will be 8.4 per cent this year, based on estimates for earnings before interest and taxes, compared with 1 per cent for Alcatel-Lucent. Quarterly sales fell 7.1 per cent to €3.5 billion.

The company said it would exit or restructure unprofitable markets, countries and contracts, as well as intensify efforts to sell businesses. – (Bloomberg)