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Lucatel: French Staff Not Safe |
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APRIL 19, 2006 |
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(NYSE:
LU
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message board)
says that planned staff cuts following the merger with
Alcatel
(NYSE:
ALA
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message board;
Paris: CGEP:PA) won't be characterized by any geographic
discrimination. (See
Alcatel/Lucent: No Job Cut Clarity Yet
and
Alcatel, Lucent Seal Deal.)
In a document filed with the
Securities and Exchange Commission (SEC)
, Lucent says it has received questions from its staff about the
planned merger with Alcatel (temporarily named "Lucatel"). The
document shows that Lucent employees are worried that the proposed
8,800 job cuts (10 percent of the combined staff) will affect them
more than Alcatel's employees in France, a country known for its
heavily regulated employment laws.
Lucent CEO Pat Russo, and the
future CEO of Lucatel, responded to these questions during an
all-employee broadcast made on April 4, as did the firm's COO, Frank
D'Amelio, at a "Town Meeting" on April 3.
The document also provides a
continental breakdown of where the combined staff -- Alcatel's
58,000 and Lucent's 30,200 employees -- are based: 38,200 (43
percent of the combined total) are in Europe, 26,900 (30 percent)
are in North America, and 23,100 (26 percent) are in the rest of the
world.
Not surprisingly, the majority of
the European staff (33,500) are Alcatel employees, while most of the
North Americans (17,900) are from Lucent.
One question in particular
highlights a key concern of Lucent staff: "How can you take a fair
and balanced approach when you consider the fact that it's almost
impossible to lay anyone off in France? What if the majority of the
8,800 job cuts have to come from Lucent?"
In her response, Russo refutes the
idea that French staff have less to worry about. "To the question
about it being impossible to cut jobs in France, I would say that's
absolutely flat-out not correct. If you look at the reductions that
Alcatel has taken as a company and the number of jobs they've
reduced in France, I would venture to say it's probably equal to
what we've done as a company," the CEO stated during the staff
broadcast.
"The processes are a bit more
rigorous, and it may take a little bit longer. But nobody should
conclude that we will make our decisions based on do-ability," she
added. "We're going to make the decisions based on what's in the
long-term best interests of the company, because there really isn't
a country in this world that you can't reduce jobs… So concluding
that all the reductions will come from Lucent is flat-out wrong. And
concluding that there can't be any reductions in countries where
it's tougher, is also flat-out wrong."
D'Amelio addressed the same
flat-out concern during his presentation, where he faced the
following question: "As we've seen in the last few weeks, it's very
difficult to lay off people in France. So this 10 percent that
you're talking about, is that going to be equally distributed
between the companies or is 90 percent of it going to come from
Lucent?"
The COO replied: "At this point in
time, I can't tell you I know exactly how the spread's going to take
place… This combined company is a global company. My guess is
there'll be synergies that are spread, but in terms of what the mix
will be, what the percentage will be, I can't say. But let me just
give you some financial facts," stated D'Amelio, before tripping up
over the extent of Alcatel's presence, about 9,000 staff, in North
America. "Alcatel has roughly 10,000 employees today in North
America -- 6,000 employees are in the U.S. They have 7,000 employees
in China, just to give you a feel for the diversity, the broad
geographic diversity of that company."
He later added: "In terms of how
you get synergies, you don't want to be taking a lot of synergies in
low-cost areas. You want to bias the higher-cost areas in terms of
maximizing value, so clearly that'll be a consideration as we work
our way through the process. But really, what will drive it is the
business decisions, and based on those business decisions we'll see
the output that'll generate the financial results."
D'Amelio also said that a new name
for the merged company wasn't a certainty. When asked whether it was
safe to assume that the combined company would take neither the
Alcatel nor Lucent names, he said "No." He added: "The reason I said
'no' is Lucent and Alcatel both have lots of brand value today,
depending on the marketplace that you're in... One of the things
that we're looking at, is there a way to not necessarily do an 'or'
but to do an 'and' and try to maximize the value that both brands
bring. We're looking at all of our alternatives."
No, we're not sure what that means
either.
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