Alcatel-Lucent CEO rules out deep job cuts


In an interview with the French daily Les Echos ALU CEO Ben Verwaayen ruled out deep job cuts similar to the scale of Nokia Siemens which in November announced eliminating 17,000 positions. According to Verwaayen:

“There’s no way we are cutting our staff by 25 percent. We are in a different situation because we have quickly turned towards the network technologies of the future.”

So like any proper CEO he left himself some wiggle room: it could be anywhere between zero and 24%.

In the end of 2011 The Motley Fool happened to publish an year-end review of the stock. If you had spent $1,000 to buy ALU stocks in the beginning of 2011, by December 30 (the last trading day in the U.S.) your ALU position would only be worth $520. Or as the Fool says, 2011 was the year Alcatel-Lucent lost its mojo. The company’s revenue also declined by 1.3% in the year.

It did sell off Genesys for over a billion dollars so after that transaction completes ALU would have a bit of financial cushion. But historically ALU’s operating expenses pretty much erase what it makes in revenues. And with today’s worldwide — especially in North America and Europe — depressed economic condition, it’s harder to increase revenue but a bit easier to trim operating costs.

There’s no doubt that Verwaayen and the ALU board face tremendous pressure from shareholders going into the new year. Let’s hope the company can be turned around without having to go down the Nokia Siemens route…

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