Alcatel-Lucent to Slash Jobs on 4Q Loss

PARIS (AP) -- Alcatel-Lucent SA said Friday it plans to cut another 3,500 jobs after it swung to a loss in the fourth quarter -- the first for which the newly merged telecom equipment maker reported combined earnings.

The Paris-based company posted a euro618 million (US$803 million) net loss for the October-December period compared with a euro381 million profit in the year-earlier quarter, when calculated as if Alcatel's Nov. 30 acquisition of Lucent had already taken place.

Revenue slumped 15.8 percent to euro4.42 billion (US$5.74 billion) from euro5.25 billion amid tougher-than-expected market conditions -- particularly in North America -- and merger-related uncertainty among customers. Operating income came in at euro21 million (US$27 million), compared with euro566 million a year earlier.

Moving to curb the slide, Alcatel-Lucent said it now plans to shed a total of 12,500 jobs, or 16 percent of its work force, over the next three years, instead of the 9,000 originally announced. It gave no details of where the cuts would be made.

"These are difficult but necessary decisions, and we will manage these reductions with care," Chief Executive Patricia Russo said in the company's statement.

The planned job losses fall short of the 15,000-20,000 suggested by a French media report earlier this week. Nevertheless, Alcatel-Lucent's French unions said they were maintaining their earlier call for a one-day strike on Feb. 15.

"The number of job cuts announced today does not change our plans for a strike," said Jean-Baptiste Triquet, spokesman for the center-left CFDT union.

The company is expected to give more details of the cuts in meetings with workers' representatives over the two days preceding the planned strike in France.

The job losses and other new cost-cutting measures will increase total merger-related synergies to euro1.7 billion (US$2.2 billion) from the previously forecast euro1.4 billion (US$1.8 billion), Russo said -- with euro600 million (US$780 million) to be realized this year.

Shares of Alcatel-Lucent rose as much as 4.2 percent but fell back to euro10.26 (US$13.33), 1.1 percent above Thursday's closing price.

The stock had plunged 8.5 percent Jan. 23, after Alcatel-Lucent flagged the quarterly revenue slide and warned that operating profit for the period was "approximately at break-even."

Russo said in the statement and a subsequent conference call that the "clearly disappointing" results reflected tougher price competition and a spending slowdown among merging telecommunications operators, compounded by "uncertainty for both our customers and our people" in the short term.

Consolidation among customers was presented by France's Alcatel and New Jersey-based Lucent Technologies as a driving force behind their merger plan, unveiled last April. The euro8.8 billion (US$11.4 billion) combination was seen as creating the critical mass to compete with the likes of China's Huawei Technologies Co. and Ericsson AB of Sweden.

Sales are likely to fall further in the first quarter, Russo warned Friday, but full-year 2007 revenue is seen increasing in step with the market. "We have now finalized Alcatel-Lucent's product portfolio," the former Lucent chief added.

Some analysts voiced doubts about whether Alcatel-Lucent could keep its pledge to halt the slide in its market share in 2007.

"We believe this will be difficult, as the company will be focused on cutting costs rather than growing share," said Richard Windsor of Nomura, who maintained his neutral rating on the stock.

Alcatel-Lucent said full-year 2006 net profit fell by more than two-thirds to euro522 million (US$678 million) from euro1.67 billion, as revenue edged down 1.7 percent to euro18.3 billion (US$23.7 billion). The company also said it planned to pay a dividend of 16 euro cents (21 dollar cents) per share.

Dow Jones Newswires correspondent Daniel Thomas in London contributed to this report.