Lucent to go for another round of job cuts: Sources

CHICAGO: Struggling telecommunications equipment maker Lucent Technologies

Inc. intends more layoffs that could number in the thousands after it completes

a voluntary retirement program, sources close to the company said on Wednesday.

"The writing is on the wall and clear that there's going to be further

reductions," one source said. A second source said the additional job cuts

could number several thousand.

The company declined to confirm that more layoffs are planned. "We're on

track with our previously announced reductions and are moving along with our

voluntary offer," Lucent spokesman Bill Price said. "We continue to

assess where we are with these actions and will make further decisions as we go

along."

More than 10,000 employees of Lucent have the deadline of July 10, to decide

on whether to accept early-retirement offers. Lucent management will decide the

number of additional layoffs after seeing how many take the retirement package,

the sources said, adding that most will likely be overseas, where it employs

about 25,000.

Lucent expects a significant acceptance rate on the buyout offers, a source

said. The Wall Street Journal reported earlier Wednesday that the

company's newest cuts could exceed 10,000 jobs. Sources told Reuters that the

figure was speculative because a total number of employees taking the buyout

offer have not been set. Before the buyout offer was made, analysts and mutual

fund managers called on Lucent to cut as many as another 20,000 jobs.

Lucent said in January it would cut 10,000 jobs, and so far 2,000 have been

slashed. After the buyout is completed, the company will employ 94,000 people.

It also plans to sell its fiber-optic cable unit and two plants to contract

manufacturers, which would reduce its staff by another 12,000, bringing the

total to 82,000 people. If 10,000 people accept the buyout offer, the total work

force would be 72,000.

Lucent Chief Executive Henry Schacht said earlier this month, that the

company would speed up its restructuring efforts, which could include selling

more plants to contract manufacturers. One source said additional layoffs also

would be determined by economic conditions, which have gotten worse over the

last month.

Communications chip maker Vitesse Semiconductor Corp., which gets about 18

per cent of its sales from Lucent, according to Bear Stearns, Tuesday warned it

would have a third-quarter operating loss rather than an expected profit due to

continuing weak demand and order cancellations.

The possible Lucent cuts would come after the world's largest telecom

equipment company, Nortel Networks Corp., shocked investors on June 15 by

predicting a staggering $19.2 billion second-quarter loss. Nortel also said it

would cut an additional 10,000-jobs. Combined with 20,000 cuts announced in

April, Nortel will have axed one-third of its workers.

The slowdown in customer spending has spread overseas and continued to hurt

the telecom sector, affecting Cisco Systems Inc., JDS Uniphase Corp. and Tellabs

Inc.

Sanford C. Bernstein analyst Paul Sagawa was not surprised by the possible

new cuts, saying Lucent needs to get rid of about 15,000 more jobs between the

buyouts and additional layoffs to get to the same level as Nortel. "Every

company in this industry faces a minimum of an 18-month stretch of very poor

sales, with declining sales most likely," he said. "The prudent thing

to do is get your organization to a size where you can actually deliver

profitability at a lower revenue level.

"Considering that Lucent is not profitable at this moment, there's a lot

of work to do and that involves downsizing, unfortunately," Sagawa added.

(C) Reuters Limited 2001.