Alcatel-Lucent, one of the largest telecom equipment manufacturers in the world, will cut 5,000 jobs, or 6.4% of its 78,000 employees under a plan to decrease spending by €750 million, after reporting a major loss for the second quarter. The company reported a loss for the second quarter of €254 million, according to Bloomberg. The negative result in the period April to June is the first loss of Alcatel-Lucent in the last five quarters and it flips the €43 million net profit in the corresponding period of last year.
The company returned to profit last year and recorded the first year of profit over the last six years, due to redundancies, cut down the administrative costs and supply chain changes. Group sales are down because of the crisis in Europe, which were leading operators on the continent to reduce costs, but also the rise of Asian competitors such as Huawei Technologies and ZTE.
The manufacturer of equipment for telecommunication networks, formed in 2006 after the Alcatel SA merger with Lucent Technologies, recently announced that it can not achieve its aim for year end on improving the adjusted operating profit margin. Company shares fell 25% this year, reaching their lowest value ever, while European rival Ericsson shares lost 14%. Alcatel-Lucent market capitalization is €1.9 billion. Alcatel-Lucent sales decreased by 7.1% in the second quarter to €3.5 billion and the company recorded an adjusted operating loss of €31 million, compared to a gain of €87 million in the corresponding period of last year.
Chief Executive Officer of Alcatel-Lucent, Ben Verwaayen said in May that telecom operators in the UK, Germany, Italy and France are reluctant to invest too much in upgrading their networks, due to the state debt crisis and unfavorable attitude of regulatory authorities. It’s not known yet what type of jobs will be cut, however Verwaayen said that they will not include research and development jobs.
Reply