Alcatel-Lucent hints at more job cuts

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The chief executive of Alcatel-Lucent on Friday hinted at further job cuts as the target for reductions was increased from 9,000 to 12,500.

Pat Russo, head of the newly created telecoms equipment company, said the new target would give better-than-expected cost savings of €1.7bn ($2.2bn) from the December merger.

Ms Russo said the new target – about 15 per cent of the workforce – came as the two companies found cost-cutting opportunities. “I don’t think the learning is over,” she said.

The news will further inflame unions at a delicate time for Alcatel-Lucent, whose profit warning weeks after merging in December showed it was suffering the effects of a complicated integration.

Ms Russo warned that problems that had badly damaged fourth-quarter trading would continue to affect the company during the first three months of 2007, which “will be down on last year”.

But she targeted a rise of 5 per cent for 2007.

French workers, who expect to hear details of the job cut plan next week, have called a two-hour strike for Thursday.

News of the €100m savings, added to the €1.6bn announced so far, buoyed shares on Friday, as did the maintained dividend of €0.16. But some analysts warned that 2007 expectations could have to be revised down again, given trading uncertainties.

Fourth quarter operating profit dropped from €566m to €21m, on revenues down from €5.3bn to €4.4bn. Turnover for the year fell by 2 per cent to €18.3bn.

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