The new Lucent

Lucent Technologies Inc. is implementing a second phase in its restructuring plan in an effort to return to profitability next year.

Like Phase I, the second phase is intended to drive out an additional US$2 billion in annual expenses. It also is designed to improve working capital performance by an additional $1 billion, reduce capital spending by an additional $750 million, and reduce headcount by an additional 15,000 to 20,000.

That means Lucent will have reduced its workforce from 155,000 a year ago to about 60,000. Very sobering numbers, and one of the most rapid and dramatic downsizings in American corporate history.

Phase II will result in a restructuring charge of $7 billion to $9 billion in the fourth fiscal quarter of 2001 to pay for the headcount reductions, product streamlining and associated asset write-offs.

In addition to returning to profitability, the goal of the Phase II restructuring plan, obviously, is to create a leaner, more customer-focused company. Lucent will continue to focus on the largest service providers in the world - the ones that are still spending money.

As reported, Lucent also will organize itself around its wire-line and wireless business, two divisions called Mobility Solutions and Integrated Network Solutions. The company will focus on mobile wireless, optical and data networking, and the integration services and software to tie it all together.

Lucent hopes this new business model will reduce the infrastructure required to support the business, which will result in significantly reduced costs. Reduced costs mean higher profits.

Fiscal year 2001 is a transition and rebuilding year for Lucent. Fiscal 2002 will see a new, leaner, faster Lucent, company executives, customers and investors hope.

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