Lucent posts $1bn first-quarter loss

Lucent has struggled in the optical networking market

Lucent Technologies, the high-tech spin-off of US telecoms firm AT&T, is cutting 10,000 jobs, or 10% of its workforce, as part of plans to return to financial health.

The announcement came as the company posted first-quarter losses of $1.02bn (£696m) or 30 cents a share and said it would take a charge of $1.2bn-1.6bn in the second quarter to cover a restructuring programme.

The results were worse than analysts already reduced expectations and compared with a profit of $1.08bn or 33 cents a share in the corresponding quarter of the previous year.

Lucent, which was spun off from its parent in 1996, is the world's biggest telecoms equipment supplier.

But it has struggled to compete in the key optical networking market and faced falling demand for its core telephone equipment products.

Chief executive ousted

Last October, Richard McGinn was ousted from his position as chairman and chief executive and replaced by Henry Schacht, who had headed the firm from 1996 to 1998.

In a statement, Mr Schacht said the restructuring would "serve as the foundation for putting Lucent back on track".

"We are outlining a comprehensive set of actions to rebuild the company for long-term, sustainable profitability."

One of the top aims is to reduce costs by $2bn.

Lucent said its job cuts would chiefly affect marketing, sales and administrative staff. It would continue to hire staff in high growth areas of the business, it added.

Capital spending reduced

The company said it would reduce capital spending by $400m by the end of the fiscal year as part of the restructuring.

And it will widen plans to contract out some manufacturing, resulting in a further 6,000 job losses before the end of the fiscal year.

There was also a warning that further measures might be deemed necessary.

"Lucent will continue to review its internal processes throughout fiscal year 2001, which may result in additional cost structure improvements and associated business restructuring charges," Mr Schacht said.

Some analysts were sceptical that the restructuring would have the desired effect. They said the company might be able to improve its financial position with cost cuts but would struggle to compete, given its current product portfolio.

Lucent's shares have dropped about 60% on the New York Stock Exchange in the past year.

They closed on Tuesday at $18.88, well down on the 52-week high of $75.25.