April 3 (Bloomberg) -- Patricia Russo, who eliminated 30,000 jobs at Lucent Technologies Inc., says she will move quickly to reduce the workforce when she takes over as head of Alcatel SA after the French company's $13.4 billion purchase of the biggest U.S. phone-equipment maker.

``We clearly intend to have speed as our bias,'' Russo said yesterday on a conference call after announcing the sale to Paris- based Alcatel, where she will become CEO. Russo aims to save $1.7 billion after three years at the enlarged phone equipment company.

Russo plans to eliminate 10 percent of the combined staff, or 8,800 jobs, after reducing the workforce by 50 percent at Murray Hill, New Jersey-based Lucent. The turnaround experience may help her boost earnings at the new company, whose products range from phone gear to networking and broadband devices, executives said.

``She had great learning from a difficult and complex challenge when she took over Lucent,'' said Fred Hassan, chairman and CEO of Schering-Plough Corp. Russo sits on the Kenilworth, New Jersey-based drugmaker's board. ``Some of those turnaround experiences are greatly helpful when you do a merger.''

Russo closed factories and offices from Landover, Maryland, to Naperville, Illinois, and Columbus, Ohio at Lucent. Pacific Crest Securities analyst Tim Daubenspeck said she may follow the same recipe this time and close plants in the U.S. first. The combined company will be based in Paris, and Russo may have a tougher time shuttering locations there quickly due to stringent labor laws, he said. Russo expects $1.7 billion in annual savings in three years.

Lucent made $38 in net income per 1,000 employees in the year ended in September 2005, according to data compiled by Bloomberg. Alcatel earned 5 euros on the same basis in 2004, the data show.

Share Swap

Lucent investors will receive 0.1952 Alcatel American depositary share for each Lucent share, the company said in a statement yesterday. The enlarged board will have 14 members, seven from each company. The new entity's name hasn't been decided. Alcatel shareholders will own 60 percent of the enlarged company and Lucent investors the rest.

Shares of Lucent have gained 15 percent this year, still down 46 percent since Russo's appointment. They slipped 4 cents to $3.05 on March 31 in New York Stock Exchange composite trading. Alcatel shares fell 1.5 percent to 12.77 euros in Paris.

Russo has to stitch together Lucent and Alcatel, the world's biggest maker of broadband Internet gear. With about $25 billion in sales, the new company challenges San Jose, California-based Cisco Systems Inc. for the top spot in the total phone and Web equipment market and surpasses Stockholm-based Ericsson AB.

`Fair, Balanced'

About half of the savings will come as she pares back the 88,200 employees. Most of the reductions will come within two years, Russo said on a conference call yesterday.

``We expect to take a fair and balanced approach,'' she said, without offering specifics about the job cuts. ``We have mutually identified synergy opportunities.'' Russo said there is overlap in sales and marketing. Facilities will be consolidated, she said.

Phone companies including San Antonio-based AT&T Inc. and BT Group Plc in London are spending billions of dollars on networks to deliver video, data and voice services over the Internet.

Russo, 53, may have a more difficult time lowering costs in France, according to Prudential Equity Group Inc. analyst Inder Singh. Millions of French citizens are protesting a labor contract instituted by Prime Minster Dominique de Villepin that reduces job protection for people under 26. France's unemployment rate is 9.6 percent, twice as high as in the U.S.

``A rapid reduction to operating costs, especially through job cuts in France, may not be feasible,'' Singh wrote in a March 29 note.

Rise and Fall

Russo became CEO in 2002, charged with stemming $16.2 billion in losses from the prior fiscal year. The company's market value had fallen 90 percent from its high and the workforce had already shrunk by about 60 percent to 62,000.

She shifted the company to focus on mobile-phone networks and away from the traditional copper phone line business. Lucent turned a profit in the fourth quarter of 2003 after 13 consecutive losses, and in 2004 won a $5 billion contract with Verizon Communications Inc.'s mobile-phone unit.

Russo, who enjoys golf and softball, plays to win. Steven Levy, a former analyst at Lehman Brothers Inc. who covered Lucent for eight years, recalled one moment in a softball match.

``She almost took my head off with a line drive,'' he said. ``I'd rather she was on my team. She's a tough competitor.''

The agreement with Alcatel comes five years after merger negotiations fell apart over who would run the company. Russo, whose pay last year including bonus increased 14 percent to $4.75 million, takes over as Alcatel CEO Serge Tchuruk, 68, was preparing to retire. He will be chairman of the new company.

Too Slow

While concentrating on wireless products, Russo fell behind companies including Cisco and Sunnyvale, California-based Juniper Networks Inc. in equipment to build high-speed Internet networks.

``The only negative thing I can say about Pat is sometimes she doesn't move quickly enough,'' Levy said.

Profit at Cisco increased 23 percent in 2004 and 30 percent to $5.74 billion the following year. Juniper's earnings tripled in 2004 and then doubled to $354 million. Lucent's profit last year declined from $2 billion in fiscal 2004.

The deal needed to happen after a flurry of takeovers among service providers, said Tony DeSpirito, a fund manager at New York- based Pzena Investment Management, Lucent's fifth-biggest stockholder. SBC Communications Inc. last year bought AT&T Corp. for $16.5 billion. The company, now called AT&T Inc., agreed in February to purchase Atlanta-based BellSouth Corp. taking full control of Cingular Wireless LLC.

``It only makes sense for the vendors to consolidate as well,'' said DeSpirito, whose firm manages $20 billion. ``You combine those two companies and it allows you to make some significant cost cuts.''