Lucent to lay off 10,000, close manufacturing plants

Under pressure from analysts and investors, financially troubled Lucent Technologies Inc. this week outlined an aggressive restructuring program calling for 10,000 jobs to be cut and two manufacturing facilities to be closed.

The Murray Hill, New Jersey-based networking equipment provider reported that it lost more than US$1.02 billion from continuing operations in its first quarter ended Dec. 31. Lucent earned US$1.08 billion in profits from continuing operations in the same quarter the previous year. First-quarter revenue from continuing operations fell 26 percent from the same period in fiscal 2000, to $5.84 billion.

The layoffs and other elements of Lucent's plan are aimed at trimming $2 billion in expenses by the end of the fourth quarter and reducing working capital by another $2 billion during the same period, said Lucent Chairman and CEO Henry Schacht in an analyst briefing this week.

A slowdown in capital spending by established telecommunications service providers, weakness in the competitive local exchange carrier market and lower software sales have all hurt Lucent's bottom line.

The company plans to sell off manufacturing operations in Oklahoma City and Columbus, Ohio, Schacht said. That could affect as many as 6,000 additional Lucent employees.

According to David Willis, an analyst at Meta Group Inc. in Stamford, Connecticut, Lucent has "a lot of fat to trim."

Jim Slaby, an analyst at Giga Information Group Inc. in Cambridge, Massachusetts, cited Lucent's unrealistic sales goals as a key reason for its troubles.

"One of the things that killed them was promising their board they would meet some very ambitious growth targets," Slaby said. To fulfill the growth promise, Lucent's salespeople began discounting equipment and even agreed to offer discounts to customers on future sales, he said.

Lucent had indeed "run the business too hot," acknowledged Michelle Davidson, a Lucent spokeswoman.

"Lucent got off track when we tried to grow our company, in hindsight, faster than it was able to grow," Davidson said. "We created an organizational structure that again, in hindsight, resulted in duplication, excess costs, lack of focus and lack of visibility."

Lucent customers contacted by Computerworld this week either said they weren't concerned or simply elected not to comment on the restructuring.

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