Alcatel-Lucent to lay off 6000

Alcatel-Lucent will initiate a set of strong actions designed to reduce the company’s break-even point by €1 billion per year in both 2009 and 2010. As a part of these initiatives, Alcatel-Lucent expects to reduce the number of managers by approximately 1,000 and the number of contractors by approximately 5,000. The company will also complete its existing restructuring initiatives as well as seek savings in real estate, support functions and discretionary spending. These actions will aim to: • Improve gross margin by reducing its manufacturing, supply chain and procurement costs, introducing stricter pricing discipline and over time, improving the product mix. • Enhance R&D efficiency by focusing on four key segments (Optical, IP, broadband and Applications enablement) and partnering or rationalizing spend in other areas. • Materially reduce SG&A expenses both in absolute terms and as percentage of revenue, through the de-layering of the organization and the elimination of sales duplication between product groups and regions. Altogether, Alcatel-Lucent expects that, by the fourth quarter 2009 on a run rate basis, it should achieve total savings of Euro 750 million at constant exchange rate, of which approximately one-third in the cost of goods sold and two-thirds in R&D and SG&A expenses. Alcatel-Lucent will be partnering, co-sourcing and participating in the consolidation of the industry to reduce spending for WiMAX, CPE, classic core, non-IMS based fixed NGN portfolio and some legacy applications. Other actions will be taken to have a more agile R&D, such as further simplifying the Carrier Product Group from 6 to 4 divisions, completing platform rationalization program for W-CDMA and NGN as well as consolidating global R&D centers.