The embattled telecom equipment company announces deep job cuts, affecting even management, to restore profitability. But pitfalls still aboundDoes Alcatel-Lucent finally have a road map to recovery? Posting its third consecutive quarterly loss on Oct. 31, the battered telecom equipment company unveiled a management shakeup and additional job cuts that will lead to a 20% downsizing of its 80,000-strong workforce by 2009.
On Oct. 31, Alcatel-Lucent (ALU) reported a third-quarter loss of $372 million on revenues of $6.2 billion, down 8% year-on-year. That was worse even than the company's earlier warnings (BusinessWeek, 9/28/07). Alcatel-Lucent now predicts full-year sales will be flat, a downward revision from earlier forecasts.
Perhaps most worrisome, Chief Executive Patricia Russo acknowledged that the company's fixed-line phone and broadband business, traditionally its star performer, is starting to feel the pinch from a weak U.S. housing market, as fewer homes are being built. "We are seeing a slowdown in spending in the wireline part of the market, particularly around North America. Some of that is related to the housing issue," she said in a conference call with journalists.
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