Alcatel-Lucent Shocks Union With Plans to Cut Nearly 5,500 Jobs

by Tom Taulli | October 18, 2012 11:13 am

Struggling telecom equipment maker Alcatel-Lucent (NYSE:ALU[1]) has announced that it will slash 5,490 jobs[2] (representing about 7% of its global work force). On the news, the shares are up about 4.7%, although the return for the year is still a miserable 29%.

The job cuts will hit areas like sales/marketing and administrative functions. In fact, the cost savings could be close to $1 billion.

Yet ALU may face pushback, especially in France, where the company plans to lay off 1,490. The country’s new socialist leader President Francois Hollande has already said he’ll fight the layoffs. Of course, fierce resistance will also come from the CFDT union.

No doubt, ALU could use the streamlining. The telecom equipment sector continues to see sluggish demand. At the same time, the competition remains intense with players like Cisco (NASDAQ:CSCO[3]), Ericsson (NASDAQ:ERIC[4]) and Huawei Technologies.

Tom Taulli runs the InvestorPlace blog IPOPlaybook[5], a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.[6]”  Follow him on Twitter at @ttaulli[7]. As of this writing, he did not hold a position in any of the aforementioned securities.

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