Lucent throws 10,000 more overboard
Flying through a storm and trying to change engines
Lucent has announced plans to axe a further 10,000 workers after issuing a further profits warning.
The embattled telecoms equipment manufacturer said it expects to employ only 35,000 workers by the end of 2003, down from an estimated 45,000 employees at the end of this year. Overall that means two in three workers will have left their jobs since 2001, when it employed 106,000
The increasingly aggressive restructuring comes as Lucent says that its fourth quarter losses will be "significantly larger" than its previously announced 45 cents per share. The company said it still expects a 20 - 25 per cent sequential decline from Q3 revenues of $2.95 billion, in line with previous estimates.
Lucent is working to reduce its overheads so that it can reach breakeven on quarterly revenues of $2.5 billion, or less. It hopes will help it return to profitability during 2003. In a statement designed to allay investor fears that its business might fail, Lucent said it has "sufficient liquidity to fund its operations and business plans" and it expect to have more than $2 billion in cash at the end of the year without utilising any new credit facility.
In a conference call with analysts, Lucent CEO Patricia Russo described the course of navigating the company back to profitability during the current slump in the telecoms market as "like flying a 747 through a storm and trying to change engines at the same time". As this is impossible, she may have inadvertently told us something she didn't mean to.
She gave broad hints that Lucent may rationalise parts of its product line outside its "core strengths in optical, circuit and packet switching, mobility and network operations software" and an increased focus on services.
The company said it would provide further details on its restructuring and their financial impact when it announces earnings on October 23. ®