Alcatel aims for operating break-even in 2009

PARIS: Alcatel-Lucent on Friday unveiled a plan to reduce the company's break-even point by 1 billion euros ($1.32 billion) per year in both 2009 and 2010.

As part of a well-flagged strategy review aimed at halting losses at the world's third-largest telecoms gear maker as its core carrier market crumbles around it, the company said it will accelerate the shift of investments toward next-generation platforms and reduce the number of contractors by 5,000.

"For full year 2009, Alcatel-Lucent expects the market for telecommunications equipment and related deployment services to be down between 8 per cent and 12 per cent at constant exchange rate and expects to maintain a stable market share," Alcatel-Lucent said in a statement.

"As a result of the expected decline in volumes and given that the improvement in gross margin will only materialise towards the end of the year, the company's initial forecast is to achieve an adjusted operating profit around break-even in 2009." New Chief Executive Ben Verwaayen is scheduled to detail the plan later today at a news conference at Alcatel-Lucent's Paris headquarters.

The $34 billion transatlantic 2006 mega-deal has left the group worth $5.8 billion, less than three times the amount it targeted in annual synergies alone. The shares have lost 62 per cent this year after a 55 per cent decline in 2007.