Bloomberg carried a story this morning suggesting that Lucent's plans to reorganise its business were put on hold, while its senior execs tried to stitch together a merger deal with Alcatel that might turn around its ailing business.

Lucent workers were left wondering who would face the chop as their chief executive, Henry Schacht, tried to piece together a deal with the French telecomms equipment manufacture: instead of making tough decisions about which product lines to cut and which staffers to make redundant. Because of the delays Lucent eventually sold its optical-fibre-manufacturing unit for a fraction of the $9 billion the business was first valued at, the agency reports.

Against this backdrop, Schacht has sent staffers a memo informing them many of their number will be shown the door today and inviting remaining staffers to join him for a Web cast, involving financial analysts, where Lucent will explain how it intends to get out of the mess it's in. Something which has certainly being a long time coming...

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LUCENT TECHNOLOGIES TODAY NEWSFLASH
Thursday, August 23, 2001
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In This Issue:

* A Message from Henry Schacht

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Dear Colleagues,

This morning we begin telling some members of our team that, because of the realities of today's market, we simply do not have enough work for them. The decision to reduce our workforce is probably the most difficult one for any company or CEO to make. But it is a necessary one. For us to succeed in the current market, we must move to a leaner, less costly organization. Over the next few weeks, we'll be saying goodbye to many talented people who have made good and lasting contributions to the business. We'll miss them and wish them well.

Last week we received permission to amend our bank covenants, giving us the green light to execute our Phase II restructuring program, which will accelerate our return to profitability and positive cash flow in fiscal 2002. We received unanimous approval from our bankers, which is a tremendous vote of confidence in our ability to turn around the business. We're aggressively moving forward with our plans to create a somewhat smaller, leaner, more focused company concentrating solely on serving the world's largest service providers. At the end of this process, we will still be the largest provider of communications infrastructure for service providers in the world.

This afternoon, along with Frank D'Amelio, Bill O'Shea, Bob Holder and Ben Verwaayen, I'll be meeting with financial analysts in New York to provide more details around our action plan to reshape Lucent for growth and return to profitability. This meeting will be Webcast, and I invite all of you to listen to the live broadcast or a replay. Instructions for accessing the Webcast will be available through LT Today and the Today@Lucent Web site.

I've asked your leaders to meet with you in early September to provide more details on your organization's focus and how it fits into the new business model. The dates and times for these meetings will be announced shortly. I also invite you to join me for an all-employee broadcast on Sept. 12, when I'll provide more clarity around our Phase II restructuring plans and our approach to the market.

Let me again offer my sincere thanks to those of you who will be leaving us. Many of you were here when we launched Lucent.

It is up to those of us who are remaining, then, to embrace the remarkable opportunity at hand. We face tough challenges, but we have an action plan to return to profitability and positive cash flow during fiscal year 2002, and to achieve industry metrics in 2003. What's more, we have a set of customers who recognize our expertise and want us with them. We aim to be their partner of choice. We know the requirements of large, complex networks better than anyone. And with Bell Labs as our innovation engine, we can provide customers with the leading-edge solutions they'll expect in the future.

We've made a lot of progress, but there is still much more to do. To succeed, everyone must align behind the strategy, be accountable for results and execute on our plan. With the passion, discipline, urgency and commitment you've demonstrated so far, I know we will make Lucent once again a vibrant, growing and profitable business.

And, as always, I thank you for your efforts.

Sincerely,

Henry

Good stuff. So Lucent finally has a "cunning plan" and its details will be explained to Lucent's (remaining) staffers on September 12. Sorry Henry (I hope you don't mind us using your first name) but might we suggest what you were REALLY trying to say is this...

Dear all,

A lot of you that weren't sacked last time will be made redundant today. Anybody left is welcome to join a Web cast where we'll tell some Wall St shirts that we had this planned all along.

Even though we lumbered from crisis to crisis for months, we've now got a fool proof plan to beat the networking start ups by having even fewer workers than them. Our bankers like the plan and have promised not to repossess the ornamental fish pools or cut up my gold Amex, which is nice.

Thanks to all the long-serving staffers who are leaving. Thanks for your ongoing focus on core client service paradigm shifting, and for not shuffling your feet on the carpet while you've had nothing to do recently. We'll have to sell it as part our second-phase restructuring plan and the scuff marks wouldn't have helped.

Henry

P.S. I've got 10,000 air miles, I have. ®

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