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Alcatel-Lucent cuts off 4,000 workers

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Alcatel-Lucent boss Pat Russo shuffled the executive deck chairs and axed 4,000 workers today as the networking group lurched into the red for the third quarter.

Russo appointed Hubert de Pesquidoux CFO, announcing Jean-Pascal Beaufret was leaving to pursue other opportunities. De Pesquidoux was previously head of the firm's enterprise group.

Further down the scale, the firm, formed by Alcatel's 2006 takeover of Lucent, is axing 4,000 employees as it tries to cut costs, mainly through an overhaul of its carrier business group. It reckons the brutal cuts will save it about €400m by the end of 2009.

It could do with the money. In the third quarter revenues slumped 11 per cent from €4.9bn (pro-forma) a year ago to €4.4bn this year. The company said that on a constant currency basis the slide was eight per cent.

Last year's pro-forma €532m net income was transformed into a €258m loss. On an operating basis, last year's €430m profit was slashed to €70m.

Alcatel-Lucent's enterprise and server businesses grew eight per cent and three per cent at constant currencies to €380m and €777m respectively.

However, the carrier group slumped 12 per cent to €3.1bn. It was the wireless and convergence groups that did the damage, sliding 20 per cent to €1.3bn and 39 per cent to €346m, respectively. Wireline grew eight per cent to €1.5bn.

Russo admitted the figures "are not a level that we are satisfied with". And things aren't getting any better in the immediate future. While it expects a "solid ramp up in revenue" for the fourth quarter, it adds that "given some of the recent uncertainty seen in the market" full year revenues will be around flat at constant rates, which is at the low end of estimates.

At the same time, Russo announced a shakeup of the company into two regional strucutres, one covering the Americas, the other the rest of the world. She has also established a new seven person management committee. ®

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