With the announcement of its 2nd quarter 2012 results, Alcatel Lucent has also announced its intentions of reducing its global head count by 5000. The company globally employs around 75,000 employees. “The Performance Program”, as the cost reduction initiative has been termed, aims to achieve an additional Euro 750 million cost reduction, bringing total savings to Euro 1.25 billion by the end of 2013.
The Performance Program:
- Costs – reduction target of Euro 1.25 Billion
- People – additional global headcount reduction of around 5,000 people
- Contracts – exiting or restructuring unprofitable Managed Services contracts with associated headcount reduction
- Geographies – exiting or restructuring of unprofitable markets
- Assets – managing our patent portfolio as an independent profit center
- Timeline –completion end 2013
Commenting on the results, Ben Verwaayen, CEO Alcatel-Lucent, said: “The second quarter performance confirms our strong positions in many attractive market segments including IP, Next-Generation Optics and Broadband Access, all of which are key investment areas that support our High Leverage Network Strategy.”
“However, despite having demonstrated our ability to deliver operational profitability, it is clear from the deteriorating macro environment and the competitive pricing environment in certain regions challenging profitability that we must embark on a more aggressive transformation. We are therefore launching today The Performance Program to accelerate our transformation and reduce costs by Euro 1.25 billion by the end of next year in order to keep ahead of market realities. These times demand firm actions.”
Commenting on The Performance Program, Ben Verwaayen concluded: “These times demand firm actions, but as this will involve shrinking our employee base and exiting certain non-profitable contracts we will use The Performance Program to execute in a measured fashion. However we are taking aggressive action that will improve our agility in the marketplace while remaining fully committed to both our customers and continuing to deliver world-class innovation.”
Source: Alcatel Lucent