Alcatel-Lucent announces loss, plans to cut 5,000 jobs

The company will cut 5,000 jobs to reduce costs

French telecom equipment company Alcatel-Lucent plans to cut 5,000 jobs after reporting a net loss of  Â¬254 million (US$308 million) in the second quarter, it said on Thursday. A performance program announced by the company will also involve exiting or restructuring markets, and managing its patent portfolio as an independent profit center.

It expects to save ¬750 million through the program, bringing total savings to ¬1.25 billion by the end of 2013.

Alcatel-Lucent said sales in its wireless and optic divisions had a double-digit decline in revenue because of moderate spending from service providers. Sales in its software, services and solution segment also declined, and the services business was almost flat, it added.

Revenue in North-America, Europe and the Asia Pacific region witnessed a double-digit decline, the company said, adding that the decline in Asia was mainly driven by China, where sales fell by 21 percent.

Competitive pricing was one of the main reasons that eroded profitability, the company said. Overall revenue was ¬3.5 billion, down 7.1 percent year-over-year.

"These times demand firm actions," said Alcatel-Lucent's CEO Ben Verwaayen in a statement. Besides cutting 6.6 percent of its total of 76,000 employees the company also plans to exit and restructure unprofitable markets and is planning to manage its patent portfolio as an independent profit center, it said.

On July 17, Alcatel-Lucent revised its financial outlook for the second quarter, announcing that it would not be able to achieve its previously announced adjusted operating margin guidance for 2012. However, the company said that it expects the second half of 2012 to be better than the first half.

Alcatel-Lucent came out of a merger of Alcatel and Lucent Technologies in 2006 and reported its first full-year net profit last February. Cost-cutting played a big role in helping the company return to profit.

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Loek Essers

IDG News Service

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