Alcatel-Lucent cuts jobs, posts 4Q loss

Alcatel-Lucent SA said Friday it plans to cut another 3,500 jobs after it swung to a loss in the fourth quarter _ the first earnings report from the recently combined telecom equipment maker.

The Paris-based company cited tougher-than-expected market conditions _ particularly in North America _ and uncertainty among customers in the wake of the combination of the French and U.S. equipment makers.

The company posted a loss of 618 million euros ($803 million) for the October-December period compared with a profit of 381 million euros a year earlier when calculated as if Alcatel's Nov. 30 acquisition of Lucent had already taken place.

Revenue slumped 15.8 percent to 4.42 billion euros ($5.74 billion) from 5.25 billion euros. Operating income came in at 21 million euros ($27 million) compared with 566 million euros a year earlier.

Moving to curb the slide, Alcatel-Lucent said it now plans to shed a total of 12,500 jobs, or 16 percent of its work force, over the next three years, instead of the 9,000 originally announced. It gave no details of where the cuts would be made.

"These are difficult but necessary decisions, and we will manage these reductions with care," Chief Executive Patricia Russo said in the company's statement.

The planned job losses fall short of the 15,000-20,000 suggested by a French media report earlier this week. Nevertheless, Alcatel-Lucent's French unions said they were maintaining their earlier call for a one-day strike on Feb. 15.

"The number of job cuts announced today does not change our plans for a strike," said Jean-Baptiste Triquet, spokesman for the center-left CFDT union, told Dow Jones Newswires.

The company is expected to give more details of the cuts in meetings with workers' representatives over the two days preceding the planned strike in France.

At the company's North American headquarters in Murray Hill, N.J., spokeswoman Mary Ward said announcements of job cuts would be ongoing throughout the year.

"We're not providing a split by region or country" until employee representatives are notified, she said. "There probably will be a larger proportion of job cuts in North America and Western Europe ... simply because that's where the bulk of the employees are."

Ward said some U.S. employees were told last month that their jobs were being eliminated, but she declined to give details.

Alcatel-Lucent currently has about 80,000 employees, including about 5,000 in New Jersey and 21,500 across the United States. That total is down from about 88,000 at the time of the merger in September, due to recent sale of its satellite, transport and security operations to Thales and the acquisition of Nortel Networks Corp.'s UMTS radio access business.

The job cuts and other new cost-cutting measures will increase total merger-related synergies _ typically cost savings and enhanced revenue _ to 1.7 billion euros ($2.2 billion) from the previously forecast 1.4 billion euros ($1.8 billion), Russo said _ with 600 million euros ($780 million) to be realized this year.

Shares of Alcatel-Lucent rose 1.1 percent to 10.26 euros ($13.33) in Paris trading. Alcatel-Lucent's U.S. shares fell 50 cents, or 3.7 percent, to $13.17 in midday trading on the New York Stock Exchange.

The stock had plunged 8.5 percent Jan. 23 in Paris, after Alcatel-Lucent flagged the quarterly revenue slide and warned that operating profit for the period was "approximately at break-even."

Russo said in the statement and a subsequent conference call that the "clearly disappointing" results reflected tougher price competition and a spending slowdown among merging telecommunications operators, compounded by "uncertainty for both our customers and our people" in the short term.

Consolidation among customers was presented by France's Alcatel and New Jersey's Lucent Technologies as a driving force behind their $11.4 billion deal, unveiled last April. The combination was seen as creating the critical mass to compete with the likes of China's Huawei Technologies Co. and Ericsson AB of Sweden.

Sales are likely to fall further in the first quarter, Russo warned Friday, but full-year 2007 revenue is seen increasing in step with the market. "We have now finalized Alcatel-Lucent's product portfolio," the former Lucent chief added.

Some analysts voiced doubts about whether Alcatel-Lucent could keep its pledge to halt the slide in its market share in 2007.

"We believe this will be difficult, as the company will be focused on cutting costs rather than growing share," said Richard Windsor of Nomura, who maintained his neutral rating on the stock.

Alcatel-Lucent said full-year 2006 net profit fell by more than two-thirds to 522 million euros ($678 million) from 1.67 billion euros, as revenue edged down 1.7 percent to 18.3 billion euros ($23.7 billion). The company also said it planned to pay a dividend of 16 euro cents (21 U.S. cents) per share.

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AP Business Writer Linda A. Johnson in Trenton, N.J., contributed to this report.