Ailing Alcatel (ALU) Will Need to Make Further Cuts if It Wants to Survive
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Alcatel Lucent (NYSE: ALU) is under some pressure today following comments earlier that CEO Ben Verwaayen and company may need to make even more drastic changes should Alcatel plan to compete on the same level as its peers.
According to Bloomberg-compiled data, Alcatel's sales-per-employee were about €49,700 (about $63,600) last quarter, which was roughly 14 percent lower than peers Nokia Siemens Networks and Ericsson AB (Nasdaq: ERIC). SG&A at 16 percent of sales was also above the two competitors.
That means that Alcatel will have to cut additional jobs to flatten costs, even amid a 5,500 position reduction announced in October
Since Alcatel merger with Lucent Technologies in 2006, the company has been burning through about €700 million annually on average. The company has investors worried as debt repayment is slated to begin next year. Data shows that about €837 million will come due in 2013, €462 million the following year, and roughly €1 billion in 2015.
Following the recent round of cuts, Alcatel will have about 72,500 workers. That number will need to drop down by another 10,000 or so for Alcatel to see any signs of light. Nokia Siemens -- a venture between Nokia Oyj (NYSE: NOK) and Siemens AG (NYSE: SI) -- boasts about 60,600 employees.
Alcatel is not alone in cutting positions, with Nokia Siemens announcing 17,000 jobs would be eliminated in 2011.
Shares are down about 0.5 percent Tuesday.
According to Bloomberg-compiled data, Alcatel's sales-per-employee were about €49,700 (about $63,600) last quarter, which was roughly 14 percent lower than peers Nokia Siemens Networks and Ericsson AB (Nasdaq: ERIC). SG&A at 16 percent of sales was also above the two competitors.
That means that Alcatel will have to cut additional jobs to flatten costs, even amid a 5,500 position reduction announced in October
Since Alcatel merger with Lucent Technologies in 2006, the company has been burning through about €700 million annually on average. The company has investors worried as debt repayment is slated to begin next year. Data shows that about €837 million will come due in 2013, €462 million the following year, and roughly €1 billion in 2015.
Following the recent round of cuts, Alcatel will have about 72,500 workers. That number will need to drop down by another 10,000 or so for Alcatel to see any signs of light. Nokia Siemens -- a venture between Nokia Oyj (NYSE: NOK) and Siemens AG (NYSE: SI) -- boasts about 60,600 employees.
Alcatel is not alone in cutting positions, with Nokia Siemens announcing 17,000 jobs would be eliminated in 2011.
Shares are down about 0.5 percent Tuesday.
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