Boston, MA 10/10/2013 (wallstreetpr) – The results for the second quarter for the global communications company were disappointing. Alcatel Lucent SA (ADR) (NYSE:ALU) reported a $1.2 billion loss. The CEO has unveiled a turnaround strategy for the company, aptly called “Shift Plan”. The plan is two pronged – it focuses on cutting costs, sell off assts worth $1.36 billion worldwide and shift the focus of the company to next-generation technologies.
The company plans to focus on gen-next technologies and move away from information technology and communications sector. The sectors identified are in the fields of cloud computing, Internet Protocol networking and broadband access technologies and services. The spending in research and development will also be reallocated to focus on these technologies. However, competition is also very strong in these sectors and they are dominated by stalwarts with deep pockets and several decades of experience behind them
To improve its financial performance and reduce costs by $1.36 billion by 2015, it plans to reduce its worldwide workforce of about 72,000 full time employees by 10,000 and to halve the number of its business hubs. The job cuts planned are: 4,100 in Europe, the Middle East, and Africa; 2,100 in the Americas; and 3,800 in its Asia-Pacific markets. This is not going down well with the European politicians. Elected representatives are already up in arms and the French Prime Minister has urged Alcatel-Lucent to have a rethink on the plan. He has also threatened to block the plan if the job cuts are not revised.
Tough times are not new for Alcatel-Lucent, they have been faring badly since the merger of two strong companies Alcatel and Lucent in 2006. The synergies expected from shared research and development costs and reduction in labor costs were quickly washed away in face of reduction in prices and increased competition. It remains to be seen if the CEO will be able to revive the fortunes of this company once again.
