Alcatel-Lucent Slimming Down, Fires 10,000 Workers

October 8, 2013 by Paul Ausick

Hand plugging ethernet cable into wall socket
Source: Thinkstock
The market for telecommunications equipment is among the most competitive in the world, and one of its biggest players is trying to get itself into fighting trim. Alcatel-Lucent S.A.(NYSE: ALU) announced Tuesday morning that it will cut 10,000 employees (about 15%) from its 72,000+ workforce and make other changes that will reduce the company’s operating costs by about 15% (€1 billion) a year beginning in 2015.

According to the company’s statement, today’s announcement is part of Alcatel-Lucent’s “Shift Plan”:

The plan aims to ensure a sustainable financial future and a successful transformation of the company by repositioning it as a specialist in the next-generation technologies of IP Networking, Cloud and Ultra-Broadband Access in order to better serve its customers.

The plan includes an increase in R&D spending on next-generation products, a cut in spending on R&D in legacy products and cuts to SG&A costs. The job cuts include 4,100 in Alcatel-Lucent’s Europe, Middle East and Africa region; 3,800 in the Asia Pacific region; and 2,100 in the Americas.

Alcatel-Lucent recently won a 10% share of the first contracts awarded by China Mobile Ltd. (NYSE: CHL) for the build out of its 4G network. Ericsson (NASDAQ: ERIC) and Nokia Corp.’s (NYSE: NOK) Nokia Solutions and Network group each won a similar amount, and two Chinese firms, Huawei Technologies and ZTE, each nabbed 25% of the work. There have even been rumors of a tie-up between Nokia and Alcatel-Lucent once the sale of Nokia’s mobile phone business to Microsoft Corp. (NASDAQ: MSFT) is completed.

Shares of Alcatel-Lucent are up more than 3% in premarket trading Tuesday morning, at $3.97 in a 52-week range of $0.91 to $4.02.