Cost cutting plans for Alcatel-Lucent

Alcatel-Lucent has announced a series of dramatic cost-cutting measures that it hopes will be enough to secure an operational breakeven point of Euro1bn revenue in both 2009 and 2010.

The belt-tightening initiatives by the giant vendor include a reduction in the number of managers by around 1,000 and to cut the number of its contractors by 5,000.

The cost-cutting announcements are part of a “major strategic transformation” plan unveiled by Alcatel-Lucent today, which includes a realignment of its operations. The company is to focus on three markets: service providers, enterprises and selected vertical, and on four areas of investment: IP, optical, mobile and fixed broadband, and applications enablement.

The company says it is accelerating its shift of investments towards next-generation platforms.

With the cuts and a tighter strategic focus, Alcatel-Lucent expects by 4Q 2009, on a run-rate basis, it should achieve total savings of Euro750m at a constant exchange rate.

Alcatel-Lucent’s outlook for the telecoms market in 2009 is far from rosy. The supplier expects the markets size for equipment and related deployment services to drop, at a constant exchange rate, between eight per cent and 12 per cent.