Rumor mill: Alcatel-Lucent board to meet on restructuring

Alcatel-Lucent's (NASDAQ: ALU) board is getting ready to hold restructuring talks next week that will address issues such as layoffs and monetizing intellectual property, according to Reuters.

Included on the agenda is where to lay off 5,000 workers and how to attract revenue on 29,000 patents after an initial effort with licensing specialist RPX did not generate the expected cash, said Reuters, citing three anonymous sources.

Alcatel-Lucent, a Franco-American company formed by a 2006 merger, is wrestling with turning around its fortunes after a particularly dismal second quarter in which it reported a net loss of $312.5 million, compared to a profit of around $53 million in the year-earlier period.

In July when the loss was announced CEO Ben Verwaayen said Alcatel-Lucent would try to regain its footing by cutting 5,000 jobs, or 6.4 percent of its 78,000 total employees, across all regions. The company has not said where the job cuts will be made, but unions in France, where more than 10 percent of the workforce is located, are said to be preparing to fight any cuts there. Alcatel-Lucent is also slashing more than $1.5 billion in costs by exiting undesired markets and contracts.

The vendor is seeking other ways to save itself as well. Alcatel-Lucent has been in negotiations with lenders regarding options for refinancing $6.1 billion in outstanding bonds and loans, Reuters said. In addition, the vendor has reportedly consulted investment bankers regarding asset sales and other possible alternatives, but the value of its operating units have been hammered by the outlook for telecommunications infrastructure sales, with declining demand slamming all players in the infrastructure industry.

Another source of disappointment has been Alcatel-Lucent's deal with licensing specialist RPX, which was announced in February and was expected to generate significant revenue, more than $1 billion some reports said, from selling rights to the vendor's patents. Having failed to bring in the expected revenues, Alcatel-Lucent's board will reportedly revisit the deal next week and assess other ways to monetize the patents going forward.

Desipte its ongoing woes, Alcatel-Lucent has not been as aggressive in cutting its cost structure as rival Nokia Siemens Networks, which intends to have slashed up to 17,000 jobs by the end of 2013 to save $1.3 billion. As part of its restructuring, NSN this year sold its microwave transport business to DragonWave, its fixed line broadband access business to Adtran and its WiMAX business to NewNet Communication Technologies.

At a press roundtable during the CTIA Wireless 2012 convention in May, NSN spokesman Barry French said rival network equipment vendors, such as Ericsson (NASDAQ:ERIC) and Alcatel-Lucent "haven't taken the steps they need to take to adjust their cost structures" but predicted they would eventually have to.

Alcatel-Lucent's current market capitalization of $2.43 billion is about a fifth of the $11.6 billion that Alcatel paid to acquire Lucent Technologies in 2006.

For more:
- see this Reuters article

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Rumor mill: Ericsson closing in on Nokia Siemens BSS unit
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Alcatel-Lucent to cut 5,000 jobs as part of new restructuring plan
Network infrastructure vendors face tough Q2, road ahead
Alcatel-Lucent to post Q2 operating loss, will miss annual profit goal
NSN: Rivals will also have to refocus, cut back

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