Alca-Lu to reshape organisation after another quarterly loss

Paris-headquartered telecoms equipment vendor Alcatel-Lucent has posted a net loss of €146mn for the third quarter of this year and revealed plans to radically change the structure of the organisation, including combining its Software, Services and Solutions (S3) division with Networks.

The new organisation will become effective from the 1st of January of next year, with the newly-formed Networks & Platforms Group to create an integrated portfolio (networking, software and services), combining the strengths of Networks and S3G.

It will be split into four business divisions: Core Networks (integrating Optics and IP), Fixed Networks, Wireless and Platforms. Strategic Industries will form together, with Enterprise & Submarine, the Focused Businesses Group. Managed Services will be managed separately.

In addition, Alcatel-Lucent will also create a Global Sales and Marketing organisation to oversee and manage all customer-facing commercial relationships, and the Global Customer Delivery organisation will continue the transformation it began last year to create a unified and agile delivery capability.

Total revenues for the third quarter of this year reached €3.599mn, down 2.8% from one year previously, with the Networks business witnessing a low double-digit decline in the quarter, reflecting mixed trends.

The IP business confirmed its strong positioning with acceleration in its growth trajectory, and the wireline business returned to growth this quarter; both activities posted good double digit increase.

This strong progression was however more than offset by double digit declines in Wireless, led by an accelerated technology shift from 2G/3G to 4G, and in Optics, where declines in legacy equipment offset flat WDM performance. Software, Services & Solutions (S3) segment witnessed a low single digit decline with Services being flat.

Ben Verwaayen, CEO of Alcatel-Lucent, commented that the results are reflective of the “significant transformation” the company is currently undertaking, with revenue growth and gross margins also affected by overall carrier spending dynamics and product mix, especially in wireless.

There is however good progress being made with The Performance Program: costs savins are in excess of €450mn since the beginning of the year, and five managed services contracts will be addressed by the end of this year.

Cuts to the firm’s overall headcount are also going to plan, said Verwaayen, with 5,500 jobs to have gone by the end of 2013.

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