Alcatel-Lucent to shed 5,000 jobs

Vendor aims to make an extra €750m in cost savings by the end of 2013 as it posts significant quarterly loss

Alcatel-Lucent is gearing up to axe 5,000 jobs as it looks to save an extra €750m (£588m) by the end of next year.

The firm today released its adjusted second-quarter results which revealed a net loss of €254m for Q2, and a 7.1 per cent drop in year-on-year revenue to €3.5bn.

Adding the extra €750m to its existing cost savings plan will bring the amount saved to €1.25bn by 2013, the firm claimed.

Ben Verwaayen, chief executive of Alcatel-Lucent, said: “The Q2 performance confirms our strong positions in many attractive market segments including IP, next-generation optics and broadband access, all of which are key investment areas that support our high-leverage network strategy.

“However, despite having demonstrated our ability to deliver operational profitability, it is clear from the deteriorating macro-environment and the competitive pricing environment in certain regions challenging profitability that we must embark on a more aggressive transformation.

“We are therefore launching the Performance Program to accelerate our transformation and reduce costs by €1.25bn by the end of next year in order to keep ahead of market realities.”

Verwaayen added that the company has become more efficient by rationalising its product portfolio; co-sourcing, reducing its cost structure and managing working capital better.

“These times demand firm actions,” he added. “But as this will involve shrinking our employee base and exiting certain non-profitable contracts, we will use the Performance Program to execute in a measured fashion. However, we are taking aggressive action that will improve our agility in the marketplace while remaining fully committed to both our customers and continuing to deliver innovation.”