Alcatel-Lucent to cut 4,000 more jobs, shares up

Subscribe to Oneindia News

PARIS, Oct 31 (Reuters) Alcatel-Lucent said it will cut another 4,000 jobs by 2009 and lowered its full-year revenue growth expectations yet again after seeing fresh signs of a slowdown particularly in North America.

The revised outlook and extra cost-cutting measures, which were largely expected, came as Alcatel-Lucent published a forecast-beating third-quarter adjusted operating profit on Wednesday.

Investors cheered the performance and the restructuring, lifting the shares more than 3 percent. By 0832 GMT, the stock was up 3.17 percent at 6.84 euros.

The French-American telecoms equipment group, which has issued three profit warnings since merging in December 2006, said full-year sales would be flat at constant exchange rates, trimming a previous forecast of ''flat to slightly up''.

As recently as June, it still expected sales growth of some 5 percent.

''We are seeing fairly recently some further signs of softness with respect to spending, again predominantly in North America,'' Chief Executive Patricia Russo said in a conference call with reporters.

The group is the leading provider of ADSL fixed-line equipment for broadband Internet, telephony and TV broadcasting but comes only third worldwide for mobile infrastructure behind Ericsson and Nokia Siemens Network.

''What investors were interested in were the benefits from the cost-cutting programme and the first fruits were found in the third-quarter results,'' said Alexander Peterc, analyst at BNP Paribas in Paris.

MORE SAVINGS The new staff cuts will bring the total to 16,500 and affect countries such as France where unions were staging demonstrations on Wednesday in front of Alcatel-Lucent's plush central Paris headquarters.

Alcatel-Lucent said it would make extra savings of 400 million euros (6.2 million) in gross margin and comparable operating expenses by the end of 2009, bringing the total to 2.1 billion euros.

It confirmed it would make 600 million in savings in 2007 but would not give specific savings forecasts for 2008.

Finance Director Jean-Pascal Beaufret, who announced on Wednesday he would leave in a few weeks, estimated the extra savings would cost about 500 million euros.

Beaufret would be replaced by Hubert de Pesquidoux, who currently heads the enterprise unit of the group.

Alcatel-Lucent posted an adjusted operating profit of 70 million euros (0.8 million) for the three months to Sept. 30 against an operating profit of 430 million euros last year and expectations of a 2.1-million euro operating loss.

The operating profit figure leaves out restructuring costs, impairment of assets, disposals and post-retirement benefit plan changes and excludes the cost of Alcatel's acquisition of Lucent recognised during the period.

''The conditions in the market are such that the volumes we are seeing are not what had been expected,'' Patricia Russo said.

The group said it was now targeting gross margins in ''the high 30's'' and adjusted operating margins of 10 percent or more in the post-integration phase beginning 2010.

Alcatel-Lucent generated revenues of 4.35 billion euros in the third quarter, up 2.3 percent from the second quarter and slightly below expectations of 4.38 billion euros based on a Reuters poll.

REUTERS MP PM1616

Please Wait while comments are loading...