October 8, 2013 - 21:43 AMT
PanARMENIAN.Net - Telecom equipment maker Alcatel-Lucent said on Tuesday, Oct 8, it would cut 10,000 jobs worldwide, calling it the last chance to turn the company around from heavy losses, Reuters reported.
It was the latest step in a plan to focus on high-growth areas ranging from 4G mobile to high-speed broadband, and to lower fixed costs by more than 15 percent, saving a total of 1 billion euros ($1.36 billion).
The product of a 2006 Franco-U.S. merger aimed at creating a global giant, Alcatel-Lucent told a European works council meeting it intends to axe nearly one in seven of its employees.
France's left-leaning industry minister Arnaud Montebourg said the loss of hundreds of French jobs was "excessive" and urged the company to revise the plan.
Other government officials acknowledged measures were needed to save the group in which France has a 3 percent stake.
"Everyone knows this plan is the last chance. The company is in a very serious situation," Chief Executive Michel Combes, the latest of three CEOs since the merger, told Le Monde newspaper.
Including past measures, the total cost of the "shift plan" is 1.2 billion euros, an amount the company expects to fund through asset sales.
The group, which employs 72,000 staff worldwide and competes with larger rivals Ericsson of Sweden, China's Huawei and Finland's Nokia, has posted five straight quarters of net losses.
Altogether, 4,100 posts will go in Europe, the Middle East and Africa, 3,800 in Asia Pacific, and 2,100 in the Americas.
France's CFDT union said it would fight a plan that entailed cuts to about 15,000 posts, although 5,000 new jobs will be created, giving the overall loss of 10,000. Nine hundred jobs would go in France, with the closure or disposal of five sites.
The union said Alcatel was planning to close its sites in the French cities of Rennes and Toulouse quickly, and sell its Eu, Ormes and Orvault sites by the end of 2015.
The Alcatel-Lucent merger was an attempt to pool resources but any savings were lost due to fierce price competition in the sector and as slow economies, particularly in Europe, dented demand for telecom equipment.
Last year it swung to a net loss of 1.2 billion euros - the biggest since 2008 - largely due to a write-down on its mobile unit and restructuring costs from an earlier plan to lay off 5,000 workers.
The restructuring will heighten speculation of a possible approach by Nokia, a move which sources close to the matter said last month the Finnish group was discussing internally.
Alcatel-Lucent confirmed it would dedicate 85 percent of its research and development budget in 2015 to next-generation technologies, up from 65 percent today. Spending on older technologies would be cut by 60 percent.
The group has a long history of innovation, for example pioneering the DSL technology that has brought quick Internet to millions through standard copper telephone lines.
However, it has been slower to trim its costs than rivals such as Nokia Siemens Networks, which cut around a quarter of its workforce some two years ago.