* French president calls on Alcatel to review plans
* Alcatel to cut nearly one in seven of its employees
* Plan is to re-focus on new high-growth areas
By Gwénaëlle Barzic
PARIS, Oct 8 French president Francois Hollande
called on Alcatel-Lucent on Tuesday to save as many
jobs as possible in France after the telecoms equipment maker
said it plans to cut 10,000 jobs worldwide, about 14 percent of
its entire workforce.
The announcement by the Franco-American group, which plans
to cut as many as 900 posts in France, was criticised by
Hollande's government which is having to battle with record
levels of unemployment across the country.
"In the framework of the decisions to be taken, the
restructuring plan, it should be examined how the job cuts can
be limited as much as possible," Hollande told reporters in the
central town of Saint-Etienne, where he was promoting government
efforts to cut unemployment.
Other government officials acknowledged measures were needed
to save the group in which France has a 3 percent stake.
Alcatel-Lucent said the job cuts represented its
last chance to turn itself around and stem losses.
The product of a 2006 transatlantic merger aimed at creating
a global giant, Alcatel-Lucent told a European works council
meeting it intends to axe nearly one in seven of its employees.
"Everyone knows this plan is the last chance. The company is
in a very serious situation," Chief Executive Michel Combes, the
latest of three CEOs since the merger, told Le Monde newspaper.
The group plans to focus on high-growth areas ranging from
4G mobile to high-speed broadband, and to lower fixed costs by
more than 15 percent, saving a total of 1 billion euros ($1.36
Including past measures, the total cost of the "shift plan"
is 1.2 billion euros, an amount the company expects to fund
through asset sales.
Alcatel's share price rose 2 percent after the news but
closed down 4 percent at 2.71 euros as the government's
opposition to its plans intensified. The stock has almost
tripled in value this year on buyers' hopes that Combes, a
former chief executive of Vodafone Europe, can rescue
"The group is eating up a lot of cash and is unable to
enhance its profitability, so some kind of change was needed to
make sure it has a long-term future," said one Paris-based
financial analyst who declined to be named.
The group, which employs 72,000 staff worldwide and competes
with larger rivals Ericsson of Sweden, China's Huawei
and Finland's Nokia, has posted five
straight quarters of net losses.
Altogether, 4,100 posts will go in Europe, the Middle East
and Africa, 3,800 in Asia Pacific, and 2,100 in the Americas.
France's CFDT union said it would fight a plan that entailed
cuts to about 15,000 posts, although 5,000 new jobs will be
created, giving the overall loss of 10,000. Nine hundred jobs
would go in France, with the closure or disposal of five sites.
"The CFDT is aware of the seriousness of the situation and
deplores this," it said in a statement. "But once again it is
the staff that are paying the price ... We will fight this plan
and make proposals to change it."
The union said Alcatel was planning to close its sites in
the French cities of Rennes and Toulouse quickly, and sell its
Eu, Ormes and Orvault sites by the end of 2015.
France's left-leaning industry minister Arnaud Montebourg
Montebourg, who has led a campaign for French consumers and
companies to buy home-grown products, said the loss of hundreds
of French jobs was "excessive."
He called on the country's network providers to help the
firm by favouring its products over those of cheaper rivals, and
asked Alcatel-Lucent to review its cost-cutting plans with trade
"We have asked management to revise the restructuring plan
downwards," he told parliament. "We can't keep on paying the
price of their errors."
But other sources in President Francois Hollande's Socialist
government, which has watched Alcatel-Lucent's problems closely
as it battles rising unemployment in France, emphasised that the
plan was an attempt to get the group growing.
The Alcatel-Lucent merger was an attempt to pool resources
but any savings were lost due to fierce price competition in
the sector and as slow economies, particularly in Europe, dented
demand for telecom equipment.
Last year the group swung to a net loss of 1.2 billion euros
- the biggest since 2008 - largely due to a writedown on its
mobile unit and restructuring costs from an earlier plan to lay
off 5,000 workers.
The restructuring will heighten speculation of a possible
approach by Nokia, a move which sources close to the matter said
last month the Finnish group was discussing internally.
Alcatel-Lucent confirmed it would dedicate 85 percent of its
research and development budget in 2015 to next-generation
technologies, up from 65 percent today. Spending on older
technologies would be cut by 60 percent.
The group has a long history of innovation, for example
pioneering the DSL technology that has brought quick Internet to
millions through standard copper telephone lines.
However, it has been slower to trim its costs than rivals
such as Nokia Siemens Networks, which cut around a quarter of
its workforce some two years ago.