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Alcatel-Lucent Slimming Down, Fires 10,000 Workers

Paul Ausick

The market for telecommunications equipment is among the most competitive in the world, and one of its biggest players is trying to get itself into fighting trim. Alcatel-Lucent S.A.(ALU) announced Tuesday morning that it will cut 10,000 employees (about 15%) from its 72,000+ workforce and make other changes that will reduce the company’s operating costs by about 15% (€1 billion) a year beginning in 2015.

According to the company’s statement, today’s announcement is part of Alcatel-Lucent's "Shift Plan":

The plan aims to ensure a sustainable financial future and a successful transformation of the company by repositioning it as a specialist in the next-generation technologies of IP Networking, Cloud and Ultra-Broadband Access in order to better serve its customers.

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The plan includes an increase in R&D spending on next-generation products, a cut in spending on R&D in legacy products and cuts to SG&A costs. The job cuts include 4,100 in Alcatel-Lucent's Europe, Middle East and Africa region; 3,800 in the Asia Pacific region; and 2,100 in the Americas.

Alcatel-Lucent recently won a 10% share of the first contracts awarded by China Mobile Ltd. (CHL) for the build out of its 4G network. Ericsson (ERIC) and Nokia Corp.'s (NOK) Nokia Solutions and Network group each won a similar amount, and two Chinese firms, Huawei Technologies and ZTE, each nabbed 25% of the work. There have even been rumors of a tie-up between Nokia and Alcatel-Lucent once the sale of Nokia's mobile phone business to Microsoft Corp. (MSFT) is completed.

Shares of Alcatel-Lucent are up more than 3% in premarket trading Tuesday morning, at $3.97 in a 52-week range of $0.91 to $4.02.

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