Alcatel-Lucent SA plans to reduce staff by 10,000 as chief executive officer Michel Combes moves forward with cost cuts to turn around the unprofitable French network-equipment maker.
The cuts represent about 14 percent of Alcatel-Lucent’s workforce worldwide, based on the 72,000 employees the Paris-based company had as of December last year. About 4,100 jobs will be cut in Europe, the Middle East and Africa, 3,800 in Asia and 2,100 in the Americas, the company said yesterday in a statement.
Alcatel-Lucent is accelerating a turnaround bid after thousands of earlier job cuts, restructuring and asset sales failed to stem losses. Pressure on equipment prices and slower investment from European carriers, along with competition from China’s Huawei Technologies Co (華為), are forcing Alcatel-Lucent and rivals such as Nokia Oyj’s network-gear unit to reduce staff.
A slimmer organization could make Alcatel-Lucent a more attractive target for an acquirer. Nokia, set to become a manufacturer focusing on wireless networks after the sale of its handset business, is evaluating a linkup with Alcatel-Lucent, people with knowledge of the matter said last month.
Alcatel-Lucent is following in the footsteps of Nokia’s network unit, NSN, which in late 2011 started a savings program to cut 17,000 positions, or about 23 percent of its total. The Finnish company has since cut more positions, in excess of 20,000 during the past two years. Cisco Systems Inc, the world’s biggest maker of networking equipment, said in August it was cutting about 5 percent of its work force.
Nokia is considering options, including a combination with Alcatel-Lucent’s wireless-gear unit, one of the people said last month.
Nokia and Alcatel-Lucent together would be a stronger challenger to Ericsson AB, the biggest maker of mobile-phone networks, and Huawei. Alcatel-Lucent has contracts with Verizon Wireless and AT&T Inc in the US, a market where Nokia trails competition. No talks are under way, they said.
About a third of Alcatel-Lucent’s employees are in Europe and a third in the Asia-Pacific region. A quarter are in the US, where Alcatel-Lucent runs Nobel-prize winning research facility Bell Labs.
In France, Alcatel-Lucent plans 900 job cuts. Combes faces a tough stance from French President Francois Hollande, a Socialist elected last year after pledging to block “a parade of firings.” Alcatel-Lucent will discuss the cuts with union representatives today, a legal obligation in France for job cuts.
Based on last year’s reported revenue, the company had sales per employee of US$257,000, according to data compiled by Bloomberg. NSN had US$313,500 and Ericsson US$305,000.