Alcatel-Lucent's Combes: 'This company could disappear'

Alcatel-Lucent (NYSE:ALU) CEO Michel Combes warned that the company is facing a dire situation and that its recently announced job cuts and restructuring moves are necessary to keep the vendor afloat.

Last week the company confirmed it will cut 10,000 jobs as part of its "Shift" reorganization plan aimed at slimming down the company as it seeks to become more of a specialist focused on IP networking, LTE and small cells and move away from investing in legacy technologies. The vendor said it's maintaining its goal of cutting fixed costs by up to $1.35 billion by the end of 2015.

However, French labor unions have come out against the plan and, according to the Associated Press, more than a thousand Alcatel-Lucent workers wearing black trash bags marked with crosses marched to the Eiffel Tower on Tuesday and staged a mock funeral for the company. The job cuts would include 900 in France and involve the closing of several sites in the country.

"This company could disappear," Combes told Europe 1 radio on Tuesday ahead of the protest. "This company hasn't made money since 2006." Combes acknowledged that "the company and its employees are going through a difficult period."

"The plan sets targets that are key to the survival of the company...But it can obviously be improved. That's the point of the social talks that begin today," he said.

Combes said he had four months to negotiate with unions the terms and the timeframe of the cuts. The French government has warned it may use new labor laws to block the plan, but analysts have said the cuts are likely to go forward.

Herve Lassalle, a CFDT union delegate at Alcatel-Lucent, said the company plan is both "avoidable and amendable," and said, "We deplore the absence of vision in the management suite," in an interview on France Inter radio, according to Bloomberg.

Alcatel-Lucent has said the 10,000 job cuts will be worldwide and will occur by the end of 2015. All geographic areas where the company operates will be impacted, with the reduction of 4,100 jobs in Europe, Middle East and Africa, 3,800 in Asia Pacific and 2,100 in the Americas. By the end of 2015, Alcatel-Lucent said it will halve the number of its "business hubs" globally. The fresh restructuring come on top of the 5,000 job cuts that Alcatel-Lucent's former CEO Ben Verwaayen announced in 2012. Verwaayen stepped down earlier this year after failing to turn around the troubled vendor.

Recently, multiple reports have indicated that Nokia's (NYSE:NOK) board is considering a deal between the company's Nokia Solutions and Networks (NSN) unit and Alcatel-Lucent. However, the reports said no formal talks between the two companies are ongoing.

For more:
- see this Reuters article
- see this AP article 
- see this Bloomberg article

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