Lucent restructure to leave 10,000 jobless

NEWS The world's largest telecommunications equipment maker also revealed it will post a $1.02bn loss for its first quarter, compared to a $1.08bn profit for the same period last year. Lucent will take a one-off restructuring hit of between $1.2bn and $1.6bn in its second quarter. The moves are even more radical than expected by analysts. Like its one-time parent AT&T, Lucent has been subject to speculation and rumour for months. Matt Hanrahan, analyst at Bloor Research, said: "It's no secret that the networking market is in trouble. And of the makers, Lucent was probably the slowest of the lot." Lucent is to cut many of the divisions that it inherited from AT&T and even more than it bought up in a whirlwind of purchases in the late 1990s. Amongst these will be a large chunk of its manufacturing capacity, which will be sold to outsourcers with the loss of a further 6,000 jobs. Henry Schacht, chairman and CEO of Lucent, said in a broadcast presentation: "We will go from a multi-division company to one with a single focus concentrated on supplying the service suppliers." Robin Duke-Woolley, analyst at Schema, said: "It's a positive move. It was evident for a while that they had to make some hard decisions and they seem to have done so. Once they bought everything - now they'll have to sell some of it. "In a sense, they're following in Cisco's footprints - Cisco is almost out of manufacturing. But one of the things we've noticed is that they haven't been as successful in Europe as you'd expect. But they have boosted their non-US sales to about 36 per cent." Schacht announced that Lucent will form an internal hit squad to reduce stock held in inventory by $2bn by the end of the year. It will also hire consultants to speed this process, he said. Lucent's $4.5bn credit is being arranged by JP Morgan and Salomon Smith Barney, both of which have put $1.25bn in the pot. Part of the money will go to replace the $2bn credit due for renewal in February.