Alcatel Lucent SA will slash 10,000 jobs in a bid to steer the company towards becoming a smaller entity focused on next-generation technologies.
The telecommunications equipment announced on Tuesday that while cutting away roughly 15 percent of Alcatel Lucent's overall workforce, a number of new jobs will be added in specialized sectors -- IP networking, cloud and ultra-broadband access.
The layoffs were announced at a meeting between Alcatel Lucent and European works council (ECID) union representatives today. By the end of 2015, Alcatel Lucent will cut away 10,000 job roles: 4,100 positions in Europe, Middle East and Africa, 3,800 in Asia Pacific and 2,100 in the United States.
In addition, the firm will halve the number of its business hubs worldwide.
Alcatel Lucent will cut roles in older technology sectors, including 2G and 3G wireless networking equipment -- hitting those in Germany and France the hardest. France will focus R&D activities on future technologies such as 4G and IP platforms, ultra-broadband mobile access and subscriber data management (SDM) technologies. However, 900 French positions will be removed in support, administrative and sales functions next year -- although this may include the transfer or deployment of staff to company partners.
5,000 new roles will be created in areas that offer growth potential for the firm, including Internet-routing.
Chief Executive Officer Michel Combes has been seeking ways to cut costs, improve efficiency and turn the telecommunications equipment maker into a more profitable business. Recent job cuts and restructuring efforts have failed to stem a tide of losses for the company, which is now unprofitable as a network equipment maker. The next wave of job cuts is part of The Shift Plan, the CEO's brainwave to cut $1.36 billion in costs, sell €1 billion in assets and move the firm towards more profitable arenas for growth in the technology sector.
As part of the refocusing plan, Alcatel Lucent hopes to reduce costs by 15 percent by the end of 2015. To achieve this, the firm says it will reallocate research & development to next-generation technologies -- which should represent 85 percent of R&D spend in 2015, as opposed to 65 percent today. In addition, R&D spend in legacy technologies will be cut by 60 percent, and administrative, sales and support functions will be reduced.
Competition outside of Europe, from sources including Huawei and ZTE, alongside falling consumer demand and the rapid development of next-generation technology, has all contributed to a rocky balance sheet for the firm. However, after Combes took over in April and promised a new, focused direction for the company -- hopefully to become profitable by 2015 -- stocks have shot up by 175 percent.
The cuts may also be a way to make Alcatel Lucent more attractive to prospect buyers before the sale of assets. Reports last month suggested the telecommunications equipment maker was in talks with Nokia about a potential tie-up. After the sale of its handset business, Nokia is set to become a smaller, more defined firm that focuses on wireless network technology.
According to a recent securities filing, Alcatel Lucent supported 72,344 as of the end of 2012.
"We launched The Shift Plan in June to give Alcatel-Lucent an industrially sustainable future. 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."