French telecom-equipment maker Alcatel-Lucent, S.A.'s (ALU) new chief executive officer Michel Combes will reportedly announce a restructuring plan on Wednesday, aimed at increasing the company's financial flexibility and the efficiency of its loss-plagued operations.
According to media reports on Tuesday, Combes will unveil measures to cut costs by about 1 billion euros, shake up management and also direct resources away from older products with shrinking revenue. The company is also likely to reveal plans to raise 1 billion euros through asset sales.
Alcatel-Lucent was created in 2006 by the merger of France's Alcatel and Lucent Technologies of the U.S. While reporting the company's first-quarter results in April, Combes had said that the company's businesses and operating model were being reviewed. Combes is a former executive of British telecom giant Vodafone Group plc. (VOD, VOD.L).
According to media reports, the cost cuts are likely to come from general and commercial expenses, and may include job cuts. Alcatel-Lucent, with increased focus on the company's Internet routing protocol business as well on wireless and broadband equipment.
Meanwhile, the Wall Street Journal reported that Paul Tufano, who has been Alcatel's chief financial officer since 2008 and chief operating officer since last fall, will leave the company to return to the U.S. Combes plans to bring in Philippe Guillemot, former chief of car-rental group Europcar, as operating chief, while the search for a new CFO continues.
According to the WSJ report, Alcatel-Lucent is also seeking to raise new debt financing - possibly in the form of high-yield or convertible bonds to begin repaying secured debt of about 2 billion euros that the company agreed to borrow in January.
Alcatel-Lucent has been reporting weak earnings results for the recent quarters due to weak wireless segment revenues. The company is coping up with rapid customer migration from CDMA to 4G LTE services, particularly in North America, and also grappling with continued market uncertainties in Europe.
In late April, Alcatel-Lucent reported a loss for the first quarter amid a marginal rise in revenues. The company's net loss group share for the quarter was 353 million euros or $459.62 million, compared to profit of 259 million euros in the same period of the prior year. Revenues edged up 0.6 percent to 3.23 billion euros from 3.21 billion euros in the previous-year period.
ALU closed Tuesday's trading at $1.87, down $0.03 or 1.58 percent on a volume of 12.59 million shares.
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