Lucent Reportedly Mulls a 10% Work-Force Reduction
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Lucent Reportedly Mulls a 10% Work-Force Reduction
Friday August 23, 2:15 pm ET
By Dennis K. Berman, Staff Reporter of The Wall Street Journal
NEW YORK -- Lucent Technologies Inc. (NYSE:LU - News) is likely to cut another 10% of its work force, according to a person familiar with the company's planning.
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Beset by bankruptcies and financial woes at its carrier customers, Lucent's headcount is expected to be about 40,000 sometime in 2003. The company currently employs around 50,000, and it has already announced plans to reduce 5,000 of those jobs by year-end.
At the peak of the telecommunications boom in 2000, Lucent employed 155,000 people.
Lucent, Murray Hill, N.J., is coming off a brutal fiscal third quarter, as orders for its equipment and services didn't hold up to already-reduced expectations. For the three months ending June 30, Lucent posted a $7.91 billion loss on revenue of $2.95 billion. Previously, the company said it could break even at around $3.5 billion in quarterly sales.
But the telecom market is now entering a new phase of constriction, bringing spending levels to lows not seen since the early and mid-1990s. New capital- expenditure reductions have rippled across the industry, from such leading, and once-reliable spenders as WorldCom Inc. , Qwest Communications International Inc. (NYSE:Q - News) and Verizon Communications (NYSE:VZ - News) Inc. .
Under this pressure, Lucent officials said in July that they have no choice but to reduce the break-even level closer to $3 billion.
"At our earnings announcement we said we were working to further reduce our breakeven, and that might result in additional cuts," Lucent spokeswoman Kathleen Fitzgerald said. "While I can't speculate on an exact number, it will be done in a way to ensure we have the products to serve customers."
The cuts are just the latest installment in what has been a two-year restructuring plan at the company. So far, however, Lucent hasn't been able to get ahead of the market, having posted nine straight unprofitable quarters.
A person familiar with the company's plans says that Lucent is still trying to improve its "quote to cash" ratios, which is company slang for the efficiency with which employees "quote" rates, fill orders, and finally get "cash" in the door. The new cuts are likely to draw significantly from such back-office processing jobs.
Lucent executives, meanwhile, have already shown a willingness to cut or scaleback some of the firm's most high-profile technology developments. In recent weeks,
Lucent has halted development of the LambdaRouter, a high-capacity optical devices that switches telecom traffic. The company once made the LambdaRouter one of its most highly-touted products, but company officials have conceded that there is now little market for the device. |
