Report: Lucent to cut 5000 jobs

Lucent Technologies today refused to comment on a Reuters story that said the beleaguered equipment vendor would cut “about 5000 more jobs than previously expected” by the end of the second quarter, due to the downturn that has devastated the telecommunications industry.

“We’re not going to comment on speculation about further job cuts,” said a Lucent spokeswoman, who added that the company would address its “major business restructuring programs” during its first quarter 2002 earnings call on April 22.

“We will be reporting on Phase 2 and where we are on cutting costs, reducing our working capital and headcount. We provide an update each quarter on that. Until then, I won’t speculate on anything.”

When asked directly whether Lucent would announce a 5000-employee cut on April 22, the spokeswoman said, “We will provide an update on restructuring in our earnings announcement, and I have no further comment.”

Industry analysts didn’t feel the same reticence. Nikos Theodosopolous, analyst with UBS Warburg said he wouldn’t be surprised if Lucent did cut an additional 5000 jobs.

“If you look at their cost structure and the current revenues they have, if there’s no pickup in their business, they will be in a loss position for quite awhile,” Theodosopolous said. “From that standpoint, we think they need to take some action. That could be reducing the number of employees, or selling off businesses that are losing a lot of money.”

Joy Mukherjee, analyst with A.G. Edwards agreed. “They are bleeding cash on a quarterly basis, and they are going to want to get back to profitability as soon as they can and will do whatever it takes.”

However, Mukherjee said not to expect anything as drastic as last year, when Lucent cut about 47,000 jobs. “As time progresses, where they can cut, they will probably keep cutting,” he said. “I think they will nip and tuck throughout the company and outsource as much as they can.”

Steve Levy, analyst with Lehman Brothers, doesn’t think people give Lucent enough credit for the outsourcing strategies the company has already executed and the expenses that have been cut. “That’s a big issue. They’ve been cutting a little bit further than they said they would, so they are probably further ahead than people think.”

Consequently, Levy also doesn’t envision a major restructuring. And though he said it was feasible Lucent could drop another 5000 headcounts, “that can be done partially through attrition.”