Alcatel Lucent axes 5,000 staff, takes right shoeing from rivals

Troubled Alcatel Lucent will axe 5,000 jobs after bleeding €254m (£199m) in its latest quarter. The telecoms kit maker said it will save €750m (£587m) in overheads by shaving more than six per cent off the 78,000 strong global workforce. Sales for Q2 2012, ended 30 June, fell 7.1 per cent year-on-year to €3.54bn (£2.77bn). …

[Andrew Moore]

Thank god...

I applied for a job at this company many years ago when they opened their Irish operation. Thank god that was one job application that failed.

[Anonymous Coward]

Might be better to state

The 3.54bn is gross, and the net profit is -254m, rather that just stating profit and loss. Otherwise it seems like you're saying they made a profit of 3.45bn and a loss of only 254m, for a total profit of 3.2bn.

All that aside, if they're losing that much money while making that much profit, they're making more mistakes than just hiring too many staff.

[Anonymous Coward]

Re: Might be better to state

Also I'm an idiot, I got gross and net back to front.

[Andus McCoatover]

Anyone else noticed....

..that mergers (Alcatel + Lucent, Nokia + Siemens, Sony + Ericsson, etc). always fail? Companies with two blokes starting it are different - Hewlett and Packard, Rolls and Royce, Pratt and Whitney seem to make it.

So, if Samsung and Huawei merge, for example, Nokia would then have a fighting chance, once it dumps the 'Siemens' millstone.

[Kevin Pollock]

Re: Anyone else noticed....

I completely agree...mergers just don't seem to work.

@Andus

IMHO...mergers and acquisitions are only made to line management's pockets.

One chain of financial despair I will add to your examples.

1993, Wellflleet merge with Synoptics (both were healthy companies at the time) to form Bay Networks - which at the time of the acquisition had bigger revenues than Cisco. The merger was a disaster from the point of view of market share, but then Bay was sold to Nortel a few years later (1998). Nortel was buying anything and everything at the time...they blew billions on those acquisitions ($9.1B on Bay). Then of course Nortel went bankrupt in 2009, and managed to unload the equipment division onto Ciena. And today Ciena is maybe a billion dollars in debt, losing market share to Huawei, and not generating enough income to pay down that debt. They are technically not bankrupt because they are able to keep up the payments on the loans, but if Ciena was a European company they would be obliged to either file for bankruptcy or show a plan of how they were going to recapitalize the company.

There is no logical reason why Alcatel bought Lucent. Lucent was in terminal decline at the time, but Alcatel was actually doing OK. The only reason I can fathom is that the management teams of both companies received huge bonuses for their "visionary" acquisition.

[thebertster]

Re: Anyone else noticed....

While the optical side of Nortel was sold to Ciena, the Enterprise data part which is the bulk of the heritage of the Synoptics/Wellfleet/Bay equipment (Chassis-based and stackable Ethernet Routing and Switching) was part of the (still profitable in and of itself at the time) NES business unit bought by Avaya who are actually investing in this part of the business and coming up with some pretty nice products again after years of being starved of R&D funds due to the financial situation of the wider Nortel. There's still a sizable and loyal install base and the product quality and innovation is back on track...so maybe we shouldn't completely write it off yet!

[wilhil]

Average cost per employee

5000 people on average cost £150,000 each? (obviously including bonuses and everything).... but still wow...

[Ramazan]

Re: Average cost per employee

Includes office rent & maintenance, s/w licenses per worker etc. Avg worker's income is half the sum IMO, at £75000

[The last doughnut]

Mergers

What senior management do when they've run out of ideas. Not surprising when those same senior management got where they are at the expense of every product or project they ever worked on, and to the detriment of all their former colleagues.

Managed decline. Perfect. Call it a transformation to keep the shareholders happy.

[Anonymous Coward]

Job went to India, and it will only get worse

They are moving more and more development to India to save money, only to discover this isn't working... Cost went down, but so went quality and keeping deadlines. So some big customers walked off resulting in more losses. Of course management doesn't link these events so I wouldn't be surprised if they shifted even more jobs to India.

[Andus McCoatover]

Re: Job went to India, and it will only get worse

Funny, isn't it?

Development, R&D, calll centres et al. go to India.

And the management are based in...Oh, OK. Yep, pretty obvious now.

Surbuton.

Well it's getting like a suburb of Chennai nowadays.

[John 62]

surprised Alcatel Lucent has lasted this long

When I used to work at Nortel, when they showed the disastrous results every quarter, they also showed the results for our competitors. At the time I remember Alcatel Lucent was doing similar numbers to Nortel