About 4,100 jobs will be cut in Europe, Middle East and Africa, 3,800 in Asia and 2,100 in the Americas, Alcatel-Lucent SA said on Tuesday in a statement. (About 4,100 jobs will be cut in Europe, Middle East and Africa, 3,800 in Asia and 2,100 in the Americas, Alcatel-Lucent SA said on Tuesday in a statement.)
About 4,100 jobs will be cut in Europe, Middle East and Africa, 3,800 in Asia and 2,100 in the Americas, Alcatel-Lucent SA said on Tuesday in a statement.
(About 4,100 jobs will be cut in Europe, Middle East and Africa, 3,800 in Asia and 2,100 in the Americas, Alcatel-Lucent SA said on Tuesday in a statement.)

Alcatel-Lucent to eliminate 10,000 positions as losses mount

The cuts represent about 14% of Alcatel-Lucent’s workforce worldwide

Paris: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% of Alcatel-Lucent’s workforce worldwide, based on the 72,000 employees the Paris- based company had as of December. About 4,100 jobs will be cut in Europe, Middle East and Africa, 3,800 in Asia and 2,100 in the Americas, the company said on Tuesday 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., are forcing Alcatel-Lucent and rivals such as Nokia Oyj’s network-gear unit to reduce staff.

“This is something Alcatel needed to do," said Eric Beaudet, an analyst at Natixis Securities in Paris, who recommends buying Alcatel-Lucent shares. The magnitude of the plan is big and shows the management’s resolve in rapidly executing its turnaround.

“A slimmer organization could make Alcatel-Lucent 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 rose 1.7% to €2.94 at 10:21 am in Paris. The stock has almost tripled this year, though it is still down more than 90% since its peak.

Nokia, Cisco

Alcatel-Lucent is following in the footsteps of competitor Nokia’s network unit, NSN, which in late 2011 started a savings program to cut 17,000 positions, or about 23% 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’s cutting about 5% of its workforce.

“Nokia is considering options including a combination with Alcatel-Lucent’s wireless-gear unit," said one of the people 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, said the people.

Less efficient

About a third of Alcatel-Lucent’s employees are in Europe and a third in the Asia-Pacific region, according to the company’s website. 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 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 on Tuesday, a legal obligation in France for job cuts.

Based on 2012 reported revenue, the company had sales per employee of $257,000, according to data compiled by Bloomberg. NSN had $313,500 and Ericsson $305,000.

Intensifying competition from Asian rivals Huawei and ZTE Corp. has weighed on Alcatel-Lucent, which was formed in the 2006 merger of French-based Alcatel SA and American company Lucent Technologies.

Former chiefs Pat Russo and Serge Tchuruk, who oversaw the merger, and Combes’s predecessor Ben Verwaayen left behind an unprofitable company with a high cost base. Plummeting sales of phone equipment in Europe have added to Combes’s challenges.

Combes has pledged to sell assets to raise €1 billion and reduce expenses by another €1 billion. The company, which has lost more than $10 billion since it was created, is also in talks with more potential research partners which could become Alcatel shareholders. Qualcomm Inc. already agreed to buy a minority stake.

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