Alcatel-Lucent cuts 5K jobs amid Q2 2012 loss

Alcatel-Lucent (NYSE: ALU) has been forced to cut 5,000 jobs across all of its regions as part of a company-wide restructuring process. The job cuts come as the Franco-American company reports a Q2 loss amid slow telecom equipment sales.

The job cuts are part of the vendor's "Performance Program" restructuring, which it says will reduce its costs by $911 million by the end of next year. In January, Alcatel-Lucent CEO Ben Verwaayen said it would not make steep job cuts on the scale that rival Finland-based Nokia Siemens Networks (NSN) is undertaking to regain competitiveness.

Part of NSN's restructuring process saw the vendor selling off its wireline business to ADTRAN (Nasdaq: ADTN) so it could focus solely on selling gear to the wireless industry.

For Q2, Alcatel-Lucent reported a net loss of $312.5 million, compared to a profit of around $53 million in Q2 2011. The company's adjusted operating loss, which was less than it forecasted, came in at $38.1 million, compared to an adjusted operating profit of $107 million in the year-ago period.

While it saw revenue gains in the IP division, the optics and traditional wireline segments declined.

Here's a breakdown of the company's key wireline metrics:

  • IP Division: Alcatel-Lucent reported that the IP division revenues rose 16.5 percent year-over-year, to €473 million ($582.5 million). In addition to the Americas and Asia Pacific regions, it saw growth in the EMEA region. A key point in the IP portfolio has been sales of the 7750 Service IP Edge Routers to large service providers such as NTT DoCoMo, for example.
  • Optics: Optical division revenues declined 16 percent to €542 million ($667.5 million). The vendor said that the terrestrial optics business witnessed a high-single digit rate of decline, thanks to resilience in next-gen products, which partially offset the secular decline of legacy optics. On the slightly brighter side, Alcatel-Lucent continued to see more service providers adopt its 100G optical single-carrier coherent technology. Port shipments of its 100G platforms, including the 1830 Photonic Service Switch (PSS), doubled sequentially.
  • Wireline: The wireline division's revenues declined only 2 percent since 2011, as growth in its fiber-based last-mile equipment offset declines across its legacy copper business. Interestingly, the second quarter was the first time that its fiber-based access revenues surpassed its copper-based access revenues within the wireline business. Although it is seeing considerable interest for its copper-based VDSL vectoring technology with over 20 trials, GPON continues to gain momentum with large carrier wins including China Telecom, which will deploy Fiber to the Home (FTTH) networks across 31 provinces.

As noted by FierceWireless, a key area of focus for company CEO Ben Verwaayen over the next several quarters will be on cost reduction and putting the company back on a path of profitability.

Of course, he faces various challenges in achieving his goals. Not only did the company spend $636 million in cash in Q2, but he faces scrutiny over the company's cash position and share price. Since he became CEO in 2008, the company's stock has lost over 80 percent of its value, and, according to Bloomberg the company is only worth about one fifth of the $11.6 billion that Alcatel paid to acquire Lucent in 2006.

Shares of the Alcatel-Lucent were listed at $1.03 on the New York Stock Exchange, in late morning trading.

For more:
- see the release
- Bloomberg has this article

Special report: Wireline in the second quarter of 2012

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