Lucent says more than 8,500 workers took buyout

Ben Klayman

CHICAGO: Struggling telecommunications equipment maker Lucent Technologies
Inc. said on Thursday that more than 8,500 employees accepted a voluntary
retirement offer, fewer than the 10,000 administrative and managerial workers
who were eligible.

Lucent, which is slashing its work force by almost 20 per cent via the buyout
and other job cuts, said last month it would offer the buyout to US management
employees - ranging from entry-level clerical workers to mid-level executives -
who are eligible for retirement, or close to it. The eligible employees had
until Tuesday to accept the buyout.

Lucent's shares closed up 81 cents, or 13.39 per cent, at $6.86 in Thursday
trading on the New York Stock Exchange. Over the past year, they have
underperformed the Standard & Poor's 500 index by about 85 per cent and the
S&P Communications Equipment index by about 44 per cent.

One shareholder viewed the buyouts as a necessary step in the turnaround.

"This is a marathon, not a sprint," said Richard Steinberg,
president of Steinberg Global Asset Management, a Florida asset management firm
with 126,500 Lucent shares. "As long as they have money and time to execute
the plan, they should be able to turn this around."

Lucent may cut more jobs

Besides the buyout, the Murray Hill, New Jersey, company has announced plans to
eliminate 10,000 positions and sell certain units. Sources close to the company
told Reuters last month that Lucent plans additional job cuts that could number
in the thousands, depending on how many took the retirement buyout.

"This voluntary offer has enabled us to not only accelerate our
restructuring plan, but give eligible employees the opportunity to leave the
business with added benefits," Lucent said in a statement. "We are
well on target with our previously announced work force reductions from
January."

The company said it will give a full report of its work force reductions, as
well as their financial impact, when it reports fiscal third-quarter earnings on
July 24.

In January, Lucent launched its restructuring, saying it would cut 10,000
jobs from 106,000. That move, along with the voluntary retirement offer, would
reduce the work force to about 87,500.

Lucent also plans to sell its fiber-optic cable unit and two plants, which
would cut another 12,000 jobs, bringing total employment to 75,500.

The company said it is crediting employees who accepted the retirement buyout
with an extra five years of service with Lucent and with five years more than
their actual age, resulting in a richer pension package. Top officers were not
eligible for the buyout.

Accelerated restructuring plan

After ending merger talks with French telecom equipment maker Alcatel at the
end of May, Lucent moved to accelerate its internal restructuring plan. The next
phase of the turnaround will include more cost reductions, product cuts,
financing issues and additional possible plant sales, Chairman Henry Schacht
said last month.

The company said on Tuesday that it would restructure its businesses into
wireline and wireless groups over the next few weeks in order to rebuild sales
amid the telecom slowdown.

Lucent said the restructuring will include management changes at the top of
its products and sales operations, and the eventual retirement of Jeong Kim,
head of its optical networking unit. The company, which posted $4.7 billion in
losses during the first half of its fiscal year and has moved to cut costs and
restructure its operations to return to profitability, is now organized around
several product lines and sales channels.

The wireline group will serve long-distance carriers, Baby Bells and emerging
carriers, while the second group will serve wireless service providers.

Analysts have said Lucent must pare its debt, sell noncore businesses such as
its fiber optic unit and cut more jobs. Under a recent credit pact, it must
raise $2 billion in cash from nonoperating sources by Sept. 30 in order to
complete the spinoff of its stake in optical components maker Agere Systems Inc.

(C) Reuters Limited 2001.