More Job Cuts Loom at Lucent
By Scott Moritz Senior Writer 08/23/2002 07:48 AM EDT
Lucent is pulling out the ax once again, and CEO Patricia Russo is doing the
swinging.
<Emat's COMMENTS: The Banks are forcing LU to cut cash burn rate. The vendor will ave its capacity top do business impaired by these cuts.
As in Marconi case: "...The banks have been trying to salvage as much money as they can for themselves while giving the company a chance to continue to operate in the longer term..."
guardian.co.uk;
The struggling telecom networking gearmaker is planning yet another massive
scaledown as it attempts to right itself in a collapsing market, people
close to the company say. These people say that Lucent veteran Russo drove
the decision to make more job and business-line cuts, signaling her
willingness to go further than Chairman Henry Schacht.
The latest round of cutbacks looms as companies across the struggling
network-gear sector face the choice of shrinking their already sinking
businesses even more or placing high-stakes bets on a long-anticipated
industrywide recovery. With the shares of Lucent and many of its peers down
90% and more over the last year alone, neither course appears certain to
succeed as the telecommunications economy continues to crumble.
Dropping
Lucent is preparing to drop product lines and cut its total staff by an
additional 25% below targeted levels, eventually bringing total staff to
between 30,000 and 35,000 workers, according to people familiar with the
company. The cuts would leave Lucent at a quarter of its size when it was
spun out from AT&T some six years ago.
The latest plans continue an effort the company started a year ago, when it
vowed to focus on its best biggest buyers and cut all unprofitable
customers, countries, products and research centers.
A number of prized projects and divisions are expected to feel the pinch,
including parts of its fabled Bell Labs, some of its highly engineered
optical efforts including its LambdaRouter switch and certain areas of data
communications and network access lines. Many of these areas were previously
thought to hold the keys to Lucent's future growth.
Sacred Cows
The latest reduction will sacrifice a sizable portion of the company's
top-line performance, say people familiar with the plans. With the loss of
several unpopular and unprofitable products, Lucent's total sales will
likely drop to a range between $9 billion and $11 billion annually, or $2.5
billion per quarter, these people say. |
