Lucent to restate sales and cut 10,000 jobs
CEO Schacht schichts on staff
Telecoms equipment manufacturer Lucent plans to restate its fourth quarter sales for a second time and embark on a swingeing $1bn programme of job cuts, according to a report by Bloomberg this morning.
Bloomberg cites people "familiar with the situation" who said Lucent will disclose the charge for the job-cuts and restate earnings, including lower forecasts for profit and sales in its first quarter, as early as today.
According to the news agency, Lucent chief executive Henry Schacht is counting on the restructuring and job cuts to put the company back on track. Up to 10,000 jobs, in areas like voice switching, public relations, finance and sales are expected to be lost.
Having exceeded profit estimates 15 quarters in a row, Lucent has had a miserable year 2000. The year has seen it cut profit forecasts in all four quarters and predict its first-ever decline in sales, factors that led the AT&T spin-off to oust chief executive Richard McGinn and install Schacht, a former chief executive who is seen as an interim replacement.
Schacht quickly revised forecasts for sales and profit in the first quarter. Last month worse followed when Lucent was forced to restate its result for the fourth quarter, which ended on September 30, that cut its sales by $125 million. Lucent hired PricewaterhouseCoopers and Cravath, Swaine & Moore to investigate why revenue was recorded improperly. This financial investigation has resulted in the upcoming restatement that paints an even gloomier picture of Lucent's fortunes, and it is now expected to actually make a loss in Q1 2001.
In common with other networking vendors, Lucent has been hit by consolidation in the US service provider market which has resulted in uncertainty and declining sales. Compounding these problems is weak demand for optical networking products.
All these factors have led to speculation that Lucent is ripe for acquisition, with Nokia and Alcatel touted as possible buyers. ®