Alcatel-Lucent – More Job Cuts Might Come

Alcatel-Lucent SA (ALU) Chief Executive Officer Ben Verwaayen will need to eliminate an additional 10,000 positions to catch up with more efficient rivals as the unprofitable phone-equipment maker’s cash pile dwindles.

Even taking into account the 5,500 job cuts announced in October, Alcatel-Lucent’s revenue per employee was 49,700 euros ($63,600) last quarter, at least 14 percent less than those of Nokia Siemens Networks and Ericsson AB, data compiled by Bloomberg showed. Selling and administrative expenses as a percentage of sales, at 16 percent and compared with 11 percent for Ericsson and Nokia Siemens’s 10.5 percent, must be lowered for the French company to survive, said Alexander Peterc, an analyst at Exane BNP Paribas in London.

“They are trying to reduce the cost base substantially with their latest restructuring effort, but this may be too little, too late,” said Peterc, whose 50-cent price estimate for the stock is 37 percent less than yesterday’s close in Paris. “Gross margins are just too low to support this.”…

Choosen excerpts by JMM from

via Alcatel-Lucent Faces More Job Cuts to Match Competitors – Businessweek.