More aggressive cost cutting planned at Alcatel-Lucent

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More aggressive cost cutting planned at Alcatel-Lucent

Simon Quicke

Alcatel-Lucent has cut its profitability goals and vowed to cut further operational costs as it tries to keep its transformational plans on track.

The telco made the disclosure as it revealed its third quarter numbers this afternoon which included a 6.8% dip in revenues year-on-year to €3,797m and a net profit of €194m for the three months ended 30 September.

In terms of business operations those working in the enterprise division could afford to give themselves pats on the back with an increase in revenues of 8.9% to €319m, but those in software, services and solutions and networks might be trying to avoid the gaze of CEO Ben Verwaayen for a while with a 4.7% and 7.1% decline in revenues.

Verwaayen has been attempting to improve the fortunes of the business since his appointment two years ago and he was frank about the progress of his transformation efforts.

"Whilst progress is not always linear, the overall picture is clear: in the last two years we have gained the confidence of our customers with our high leverage network and application enablement strategy; the transition from voice to video is taking place around the world and our portfolio is directly addressing that transformation," he said.

He added that in Europe the market remained "hesitant and focuses on 3G renovation where we are not playing to the extent we do in other parts of the globe".

The warning about weaker revenues than previously expected in its fiscal Q4 came as a result of the ongoing market uncertainties, particularly in Europe.

"We are reducing our costs and increasing our profitability. However, we are not at a level we are satisfied with. And given economic uncertainties, we will take more radical actions to accelerate our transformation and reduce quickly our costs structure, especially in Europe," he added.

The vendor is looking to deliver additional savings of €200m in fixed costs next year.


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