Alca-Lu cuts 6,000 jobs ahead of shrinking market

Alcatel-Lucent plans to cut 1,000 management and 5,000 contractor positions as it braces itself for a shrinking comms equipment market next year.

In its "strategic transformation" plan, unveiled by new CEO Ben Verwaayen on Friday, the beleaguered vendor expects to save 750 million euros and break even in 2009.

The company predicts the communications equipment and services market will shrink between 8% and 12% next year, but believes it can maintain its market share.

Under the plan, Alcatel-Lucent will focus on four key areas: IP, optical networks, mobile and fixed broadband, and applications enablement.

It will boost investment in LTE, W-CDMA, enhanced packet core and open application platforms, and will sell off or partner in non-core areas such as Wimax, CPE and non-IMS NGN.

"We want to stimulate a sustainable business model for the industry that will fuel innovation and the capital investment required to expand the overall web experience to more people and businesses," Verwaayen said.

The company said it saw opportunity in combining the "trusted network environment" with the creativity of "web 2.0, web 3.0 and beyond".

"This strategy requires providing an open environment, which does not exist today, where all these trusted capabilities can be available between the network and "˜over-the-top' applications typical of web 2.0," it said.

By 2010 the company expected a gross margin in the mid-30s range and an operating margin in the mid single-digit range.