Alcatel-Lucent to shed 12,500 jobs

Company says cuts will be deeper than previously stated, but Middle East will not be affected.
Alcatel-Lucent to shed 12,500 jobs
By Rob Corder & Reuters
Fri 09 Feb 2007 06:46 PM

Alcatel-Lucent will shed 12,500 jobs or 16 percent of staff, as a result of its complex transatlantic merger, but Middle East jobs will be safe, according to Mazen Hamadallah, general manager and country senior officer for the UAE, Oman, Qatar and Kuwait.

Speaking to ArabianBusiness.com sister publication, IT Weekly, he said that the company's Middle East operation was planning to increase headcount. "We see it as a growing market and we intend to strengthen resources further," he added.

On a global basis, the cull is deeper than expected and may not be the end of the company's bad news. It has already warned that it sees tough times ahead with another dip in sales in the first quarter.However, disruptions from Alcatel's acquisition of U.S. telecoms equipment rival Lucent should ease over time and the newly combined business should lift full-year revenues by at least 5 percent, it predicted on Friday.

"We expect that we will resume growth after a challenging first quarter...as short-term uncertainties and distractions from the merger are mitigated," Chief Executive Patricia Russo said in a conference call with analysts.

Alcatel-Lucent, which issued a profit warning in January, kept its annual dividend unchanged, reassuring those investors who feared the restructuring would put pressure on cash.

The pay-out, the in-line annual results and job cuts lifted the shares more than 3 percent.Traders liked the news of job cuts. The stock was up 1.77 percent at 10.33 euros by 1321 GMT outperforming the technology index up 0.86 percent.

"In summary, while scepticism is likely to remain, we feel management has given some comfort that the issues faced by Alcatel-Lucent are short-term rather than structural," Deutsche Bank said in a note.

The Paris-based group incurred a net loss of 618 million euros ($802.3 million) in the three months to Dec. 31, including exceptionals of 755 million euros, compared with a profit of 381 million euros a year earlier.

Workers at Alcatel-Lucent have called for a strike on Feb. 15 to protest against the job cuts which were previously expected to amount to 9,000, or 11 percent of staff. Details on the speed of the downsizing or breakdown were not given.

"The cuts will be discussed at each level in each country with organisations representating employees at Alcatel-Lucent," Finance Director Jean-Pascal Beaufret said in a conference call.

Alcatel-Lucent said it now expected pre-tax savings of 1.7 billion euros over three years, up from 1.4 billion euros previously.

It said a substantial majority of the savings would be achieved in the first two years and 55 percent would be headcount related."There are still 40 percent more jobs cut than announced (previously) which proves that there are some difficulties that had not been foreseen," Jean-Baptiste Triquet, a member of the CFDT union told Reuters on Friday.

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