Friday, October 19, 2001

Lucent slashes staff in survival play

Published in Interface Tech News

NORTH ANDOVER, Mass. ‹ Lucent Technologies cut nearly 1,000 job at its Merrimack Valley Works plant in a recent effort to save itself. The cuts were part of a 50 percent job reduction effort at Lucent, resulting from reduced revenue and changing customer demands.

The company-wide cutbacks will reduce the Lucent workforce from 123,000 at the beginning of 2001 to about 60,000 at the end of 2002, the company said. The Merrimack Valley plant's employment will drop from 3,750 to 2,800, said Lucent spokeswoman Mary Ward, who would not give a time frame for coming reductions.

"We're always reviewing what we need in terms of staffing levels," she said. Now that Lucent is moving toward outsourcing tasks, she said, jobs in the company have to go.

"(The reduction is) a response to the new business model of using outside contractors," Ward said. "Most of it is in response to the current market conditions."

Those conditions, according to Forrester Research analyst Maribel Dolinov, are difficult.

While many carrier companies are publicly saying they are moving from circuit-switching to packet-switching, those same companies had been placing sizable orders for circuit-based equipment. Now the carriers are cutting back their purchases of older technology, leaving companies like Lucent trying to bridge the gap while dealing with reduced revenue.

Lucent said it is working hard to continue its relationships with carriers. "We're doing whatever we can to help our customers," Ward said.

Dolinov said Lucent might be handicapped by the sense that the company is in bad shape.

"A lot of the good folks have gone out with the natural brain drain (that follows job reductions)", Dolinov said.

But those with good ideas don't have anywhere to go, with Nortel also laying off and start-ups experiencing financial droughts. In some cases, Dolinov said, laying low might be the best course of action. "You might as well just stay at Lucent and try and make it happen," she said.

The next six to eight months will show whether Lucent and its competitors will be successful, Dolinov said, and it could take longer than that for real results to appear. Lucent itself said it doesn't expect to see profits until fiscal 2003.