Alcatel-Lucent Changes Try Patience Of Partners

The announcement brought a wary response from some Alcatal-Lucent business partners, who said they already have been buffeted by several rounds of company layoffs and management changes since the merger of the two companies last year.

CEO Patricia Russo said that in addition to the cutbacks, the company is streamling its organization with a new management committee. Hubert de Pesquidoux has been named Chief Financial Officer, replacing Jean-Pascal Beaufret, who is leaving the company to pursue other opportunities. "This streamlined management structure enables a more efficient, more focused company with clear lines of accountability," Russo said in a statement.

The revised outlook and extra cost-cutting measures, which were largely expected, came as the French-American telecoms equipment group published a forecast-beating third-quarter adjusted operating profit on Wednesday, Reuters reported. Investors cheered the performance and the restructuring, lifting the shares more than 4 percent.

Alcatel-Lucent, which has issued three profit warnings since merging in December 2006, said full-year sales would be flat at constant exchange rates -- at the low end of its forecast range of "flat to slightly up" set last month, Reuters said. As recently as June, it still expected sales growth of some 5 percent.

"We are seeing fairly recently some further signs of softness with respect to spending, again predominantly in North America," Russo said in a conference call with reporters.

Alcatel-Lucent partners said the unsettled atmosphere surrounding the company's operations has made it difficult for them. "There has been an extraordinary number of organizational challenges for Alcatel-Lucent," said Rick Sommers, president of Millennium Networks, an Alcatel-Lucnet reseller based in Perris, Calif. "I'm not presently pleased with the programs they are doing."

Sommers described a series of staff changes and shifting sales strategies that have made it hard for partners to sell Alcatel-Lucent telecommunications infrastructure products to telephone companies. "They now need to institute some rules of engagement," he added.

Francisco Granadino, vice president of sales and marketing with VAR Star Microwave Service in Fremont, Calif., echoed the feeling that Alcatel-Lucent changes are undermining performance. The company sells Alcatel-Lucent microwave radios.

"There has definitely been a lot of shifting of personnel in the last two years in the channel group," Granadino said. "The products continue to be reliable and competitive in the VAR market. The product is strong; the pricing seems to be competitive. But for the management, there has been a lot of uncertainty. It seems to permeate down. We've seen a lot of changes."

Alcatel-Lucent is the leading provider of ADSL fixed-line equipment for broadband Internet, telephony and TV broadcasting but comes only third worldwide for mobile infrastructure behind Ericsson and Nokia Siemens Network, according to Reuters.

The new staff cuts will bring the total to 16,500 and affect countries such as France where unions staged demonstrations on Wednesday in front of Alcatel-Lucent's plush central Paris headquarters, Reuters said.