Alcatel-Lucent to cut 5,490 jobs worldwide

PARIS Thu Oct 18, 2012 8:28am EDT

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PARIS (Reuters) - Telecoms equipment maker Alcatel-Lucent (ALUA.PA) plans to axe 5,490 jobs worldwide as part of a cost-saving programme unveiled in July, with more than a quarter of the cuts coming in France.

Union representatives on Thursday pledged to fight the 1,430 job cuts in France, which represent more than 15 percent of the company's 9,000 staff in the country, and called on the government to intervene.

"We are in shock," Isabelle Guillemot, of the CFDT union, said on Thursday. The CFDT added in a statement that the move was a "human and industrial catastrophe" and called on workers to hold protests on Friday.

The French company said in July that it would reduce its global headcount by "around 5,000" staff and find 1.25 billion euros ($1.64 billion) in savings by the end of 2013 by exiting unprofitable markets and contracts to weather stiff competition and weak demand in the global telecoms equipment industry.

Alcatel-Lucent employs 76,000 people worldwide.

"These are difficult decisions but are necessary for the long-term health and sustainable profitability of the company," a spokesman for the group said on Thursday.

Alcatel-Lucent shares were up 7 percent at 1148 GMT, adding to a 7 percent bounce on Wednesday. Despite the two-day rally, the shares are still down about 60 percent since a peak in February, giving it a market value below 2 billion euros.

Alcatel-Lucent is also the most shorted stock on the French blue-chip CAC 40 index .FCHI with 16 percent of outstanding shares out on loan, according to Markit data, a sign that many investors are betting on further share price declines.

Chief Executive Ben Verwaayen said in July that the job cuts would be global but would not affect the 26,000 staff working on research and development.

The CFDT union said that the cuts would mainly hit support functions such as sales, marketing, finance and human resources. Overall, the company plans to make 3,300 job cuts in the Europe, Middle East and Africa region, with 990 in Asia-Pacific and 1,200 in the Americas

The news adds to thousands of job cuts at large French groups including car maker PSA Peugeot Citroen (PEUP.PA), drugmaker Sanofi (SASY.PA) and airline Air France (AIRF.PA) in recent months, creating a headache for France's new Socialist government as it tries to tackle unemployment at a 13-year high.

Industry Minister Arnaud Montebourg had planned to meet Alcatel Chairman Philippe Camus after the summer holidays.

Alcatel-Lucent is grappling with high cash burn and lacks the scale of rivals Ericsson (ERICb.ST) and Huawei HWT.UL. It issued a profit warning and posted a loss in the second quarter and is due to give an update on the third quarter on November 2.

Verwaayen managed to steer the group to its first annual profit last year since the ill-fated 2006 merger that formed the group, but it has been hit by client spending cutbacks this year, especially in Europe.

The group said last month that it would restructure to centralize procurement, sales and marketing and reshuffle its management as part of the cost-cutting plan.

($1 = 0.7621 euros)

(Additional reporting by Blaise Robinson; Writing by James Regan; Editing by Erica Billingham)

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