Alcatel-Lucent: Strategic Transformation and Realignment AnnouncementAlcatel-Lucent: Strategic Transformation and Realignment Announcement
The press release states that ALU intends to reduce the number of managers by 1,000. While that may initially sound like a lot, turns out there are 50K managers in their employee base of approximately 70K.
December 12, 2008
The press release states that ALU intends to reduce the number of managers by 1,000. While that may initially sound like a lot, turns out there are 50K managers in their employee base of approximately 70K.
Having braved the early hour (7 AM in NY) to listen to Alcatel-Lucent's analyst call, let me share some of the insights that go beyond what can be read in the press release.First, the mood of the call. CEO Ben Verwaayen, who was speaking to an assembled group in ALU's Paris headquarters as well as to a global financial and industry analyst audience, came off to my mind very typically Dutch, which is to say no-nonsense. Certain targets were outlined in the announcement and when the financial analysts tried asked questions like, "Can we get more color on" X, Y or Z, Verwaayen replied with a pointed, "No." I didn't take this as rude; I took it as "don't waste my time." He also pointedly refused to comment on recent rumors about a Nortel bankruptcy filing. There was a clear sense that there is a new sheriff in town, one who is not about to get kicked around by analysts or the financial press.
Next some comments on the cuts that were announced. The press release states that ALU intends to reduce the number of managers by 1,000. While that may initially sound like a lot, turns out there are 50K managers in their employee base of approximately 70K. A 2 percent cut certainly doesn't sound that draconian, especially when companies in sectors like banking are announcing thousands and thousands of job losses. The cut in the number of contractors, 5,000, is off of a base of approximately 10,000.
Finally, what about enterprise? Turns out that this call was primarily about laying out a new carrier strategy (see the press release) and not about giving specific details on enterprise plans. Another call will be scheduled, likely in early January, where Tom Burns, President of the new Enterprise Product Group and Paul Segre, President of the new Applications Software Group and CEO of Genesys, will outline how the top-down strategy will impact the enterprise segment.
As Ricky Ricardo would say, Burns and Segre will have some 'splaining to do. While Verwaayen opened by saying that Service Provider, Enterprise and selected Verticals were the markets ALU serves, he went on to say that CPE is an area where they will reduce spending. While not a single financial analyst asked a follow-up question on that, the enterprise industry analysts will be looking for answers.The press release states that ALU intends to reduce the number of managers by 1,000. While that may initially sound like a lot, turns out there are 50K managers in their employee base of approximately 70K.
