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Alcatel-Lucent to Cut Up to 1,800 Europe Jobs, Union Says

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Alcatel-Lucent Chief Executive Officer Ben Verwaayen
Alcatel-Lucent Chief Executive Officer Ben Verwaayen pauses during a television interview in Davos. Photographer: Simon Dawson/Bloomberg

Feb. 9 (Bloomberg) -- Alcatel-Lucent, France’s largest telecommunications-equipment supplier, plans to eliminate as many as 1,800 positions in Europe through firings and relocation, a top union official said.

Almost 500 positions in Italy, or 20 percent of the total in the country, will probably go, Philippe Saint-Aubin, a representative of the European workers’ council for the Paris-based company, said in an interview today. Also affected will be more than 10 percent of the workforce in Belgium, and 5 percent in France, where Alcatel employs 9,000 workers, he said.

Alcatel-Lucent, scheduled to report earnings tomorrow, lags behind rivals such as Nokia Siemens Networks in adjusting its workforce as phone companies withhold gear orders. Nokia Siemens, the venture between Nokia Oyj and Siemens AG, said in November it will cut 17,000 jobs, or about 23 percent of its workforce.

Alcatel Chief Executive Officer Ben Verwaayen, who took over two years after the 2006 merger with U.S.-based Lucent, vowed to make profits and cash generation “normal” at the gear maker by the end of 2011. As his three-year turnaround plan neared its end, Verwaayen has delayed into this year a goal of making the company generate positive free cash flow.

‘Maximize Workforce’

After five consecutive years of losses, analysts estimate Alcatel will report 2011 net income of 396 million euros, according to the average of 19 estimates compiled by Bloomberg. Sales probably slipped 0.8 percent to 15.88 billion euros from a year earlier, the average of 31 estimates.

Alcatel isn’t alone in facing shrinking demand from telecom operators. Ericsson AB last month cited slowing spending from North American customers to explain a slump in quarterly earnings, which sent the stock down 14 percent within a day.

“Our priority is to continue to reduce our fixed and variable costs,” Alcatel-Lucent spokesman Simon Poulter said, declining to comment on the number of positions affected. “We are doing that through a number of measures. They include the application of our global presence to maximize our workforce and apply talent effectively where it can generate value.”

Verwaayen, a former BT Group Plc CEO, told Les Echos newspaper last month that it was “out of the question to reduce our workforce by 25 percent.”

Employee strike

The job targets were communicated at a Jan. 18 meeting with management, Saint-Aubin said.

“The Italian unit is most threatened today and we’re not sure that we will be able to reposition everyone being targeted in Belgium,” he said. “In France we are not sure that we will end the year without some damage.”

About 600 to 700 employees -- some from Italy and Belgium - - are expected to gather tomorrow in front of Alcatel-Lucent’s headquarters to protest a worldwide freeze in salaries, Roland Tutrel and Stephane Dubled, two union representatives for the French unit, said in separate interviews.

At the end of 2010, Alcatel-Lucent employed about 79,000 workers worldwide, its annual report showed.

Shares of Alcatel-Lucent climbed 0.2 percent to close at 1.50 euros in Paris. The stock had fallen about 44 percent in the past 12 months. Ericsson slipped 0.2 percent to 62.55 euros on the Stockholm exchange.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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