Embattled networking equipment vendor Alcatel-Lucent will cut another 10,000 jobs as part of its larger restructuring plan to find the stable financial footing that has proved elusive during the seven years since its creation.
The job cuts—as well as a redistribution of R&D money and other moves—are part of the Shift Plan restructuring initiative announced by Alcatel-Lucent executives in June and is aimed at saving at least $1.36 billion in costs by the end of 2015, company officials told its European works council Oct. 8. The Shift Plan also is designed to bring in another $1.3 billion by selling various assets over the next two years.
The job cuts will take place over the next two years.
"We launched The Shift Plan in June to give Alcatel-Lucent an industrially sustainable future,” Michael Combes, who took over as the company’s CEO in April, said in a statement. “The strategic choices we made have been validated by our customers. To carry out this plan we must make difficult decisions and we will make them with open and transparent dialogue with our employees and their representatives. The Shift Plan is about the company regaining control of its destiny."
The company, which has about 72,000 employees, was created in 2006 with the merger of Alcatel and Lucent, introducing what executives hoped would be a networking giant that would compete with the likes of Cisco Systems and Ericsson. However, the company has struggled financially from the start—its first profitable year came in 2011, but by 2012, Alcatel-Lucent was losing money again.
The company has undergone a number of efforts to become profitable, most recently in the summer of 2012, when it cut 5,000 jobs as part of a plan to cut $1.5 billion in costs.
Part of the Shift Plan calls for Alcatel-Lucent to move away from being a more general telecommunications equipment vendor to focusing on the high-growth areas of IP networking and ultra-broadband access. Among the moves announced Oct. 8 was reallocating R&D investment to next-generation technology, growing that area from 65 percent to 85 percent of all R&D spending. In addition, the company will reduce R&D spending in legacy technologies by 60 percent. The company also will cut administrative, sales and support functions.
The job cuts will be felt worldwide, with 2,100 jobs being lost in the Americas and 4,100 in Europe, the Middle East and Africa. Alcatel-Lucent will have cut in half the number of worldwide business hubs by the end of 2015, the company said.
There has been speculation that Nokia, once its sells its handset business to Microsoft, will link up in some fashion with Alcatel-Lucent, though no talks reportedly are under way.