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10/31/2007
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Alcatel-Lucent Revamps Management, Will Cut 4,000 More Jobs

A seven-person management committee reporting to chief executive Patricia Russo has replaced a cumbersome 21-person committee.

In its latest move to stabilize its unprofitable ship, Alcatel-Lucent shook up its top management ranks and said it would cut another 4,000 jobs as the firm Wednesday reported a net loss of Euros 345 million ($500 million) in its third quarter. The companies had reported Euros 532 million in profits for the year-earlier quarter.

A new seven-person management committee reporting to chief executive Patricia Russo has replaced a cumbersome 21-person committee. "This streamlined management structure enables a more efficient, more focused company with clear lines of accountability," Russo said in a statement.

Alcatel-Lucent said the new management committee will oversee the company's strategy, organization, corporate policy matters, long term financial planning, and human resources strategy. In addition, the committee "is charged with assuring the execution of the company's plans and business performance," the company said.

The company also will layoff an additional 4,000 employees in an effort to save another $577 million. Previously, Alcatel-Lucent had said in the wake of the merger of the two firms that it would lay off 12,500 employees. The company is still working to layoff the earlier contingent. By targeting another 4,000 cuts, Alcatel-Lucent predicted it will save Euros 400 million.

Alcatel-Lucent stock has plunged nearly 40 % this year as the company has issued warnings that it won't meet its financial numbers.

Like other suppliers of telecom equipment to carriers, particularly those delivering wireless gear, Alcatel-Lucent has been hit by slow demand. Infrastructure suppliers Ericsson and Nokia-Siemens also have been hit hard by low demand for infrastructure. Alcatel-Lucent said revenue in its wireless business segment was Euro 1,276 million, which represented a decrease of more than 20% from the year-earlier quarter.

The company suggested that its effort in the emerging wide area wireless technology WiMax is bearing some fruit. Alcatel-Lucent said it has signed more that 70 WiMax pilots and deployments across the world.

"OneMax, our customer in the Dominican Republic, opened commercial service last week on its WiMax network," Alcatel-Lucent said "This is the first WiMax network commercially launched in the 3.5 GHz band -- a world premier."

In another development, Alcatel-Lucent said Jean-Pascal Beaufret would leave his post as chief financial officer and be replaced by Hubert de Pesquidoux, who has been leading the company's Enterprise Group.

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