Alcatel-Lucent shifts gears

Dec. 15, 2008
DECEMBER 15, 2008 -- Alcatel-Lucent announced a new strategic plan that will see if focus on three main markets and four areas of investment.

DECEMBER 15, 2008 -- Alcatel-Lucent (search for Alcatel-Lucent) announced a new strategic plan that will see if focus on three main markets and four areas of investment.

The three markets are service providers, enterprises, and "selected verticals." The investment areas include IP, optical, mobile and fixed broadband, and "applications enablement."

"We will work closely with our service provider, enterprise customers and applications providers to make this strategic transformation happen," said Ben Verwaayen, CEO of Alcatel-Lucent.

Alcatel-Lucent will shift investments towards next-generation platforms. These include:


  • "areas of leadership" such as IP, optics, broadband access, IMS core, and CDMA EV-DO
  • "focus areas" such as LTE, W-CDMA, enhanced packet core, and open application enablers
The company also said it begin "streamlining" product offerings in the areas of CDMA 1x, GSM, ATM, ADSL, DLC, and legacy applications.

The company will look to partner, co-source, and "participat[e] in the consolidation of the industry" to reduce spending for WiMAX, CPE, classic core, non-IMS based fixed NGN portfolio, and some legacy applications.

The company will also restructure. The Carrier Product Group will reduce from six to four divisions. There will also be a "platform rationalization program" for W-CDMA and next-generation networks as well as consolidating global R&D centers.

Alcatel-Lucent also announced cost cutting measures designed to reduce the company's break-even point by Euro 1 billion per year in both 2009 and 2010. As a part of these initiatives, Alcatel-Lucent expects to reduce the number of managers by approximately 1,000 and the number of contractors by approximately 5,000. The company will also complete its existing restructuring initiatives as well as seek savings in real estate, support functions and discretionary spending.

Altogether, Alcatel-Lucent expects that, by the fourth quarter 2009 on a run rate basis, it should achieve total savings of Euro 750 million at constant exchange rate, of which approximately one-third in the cost of goods sold and two-thirds in R&D and SG&A expenses.

"The new management team is committed to rapidly executing this new strategy and leveraging the new streamlined organization. We are focused on delivering results and restoring profitability. I am confident we have now the strategy and the strengths to succeed," said Verwaayen.

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