Uncertainty for Alcatel-Lucent's Irish staff
09-02-2007
by Emmet Ryan

Alcatel-Lucent's 390 Irish employees will begin talks with management next week to discuss their prospects as the firm signalled 12,500 job losses worldwide.

The French-American company is the world's biggest manufacturer of telecommunications equipment and the cuts will see 16 percent of its global workforce let go. The hardware provider, which employs 260 full time staff and 130 contractors in Ireland, announced the cuts when it released its financial fourth quarter results for 2006 on Friday.

The latest down-sizing proposal is nearly 40 percent more than Alcatel-Lucent's previous announcement in July that it would cut 9,000 employees from its workforce.

"These are difficult but necessary decisions, and we will manage these reductions with care," said Patricia Russo, chief executive of Alcatel-Lucent.

Irish employees of the firm will have to wait to find out if they will be affected as the company declined to give details on the timing of the job cuts or the regional breakdown.

Representatives of the company's employees are to meet with management to discuss the impact the announcement will have on Irish workers.

"The process will start next week and will continue for 90 days," Ann Fox, a consultant for Alcatel-Lucent in Ireland, told ENN.

The cuts come as the French-American firm posted a net loss of EUR618 million for the quarter ending December 31, having recorded a profit of EUR381 million a year earlier. The company record losses per share of EUR0.27 for the quarter having had earnings per share of EUR0.14 for the same period the previous year.

Alcatel-Lucent's operating profit for the period was EUR21 million, down from EUR566 for the fourth quarter of 2005. Revenues for the fourth quarter of 2006 totalled EUR4.42 billion, having recorded revenues of EUR5.24 billion a year earlier.

"While the results for the fourth quarter are clearly disappointing, the positive long-term benefits of the merger and the growth potential of Alcatel-Lucent remain as envisioned," said Russo.

Alcatel-Lucent expects to increase its pre-tax savings over the next three years from its previous target of EUR1.4 billion.

"We now believe the combination of our original synergy plan and additional cost reductions will enable us to realize a total of EUR1.7 billion pre-tax cost savings within three years, with at least EUR600 million for 2007," said Russo.

Despite the losses the telecommunications equipment maker still intends to pay a dividend of EUR0.16 per share for 2006, the same dividend as it paid in 2005.

The market responded positively to news of the dividend and shares in the company rose by as much as 4.2 percent to EUR10.58 in morning trading.