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Alcatel-Lucent (NYSE:ALU) Union Announces Strike to Protest Job Cuts

Alcatel-Lucent (NYSE:ALU) Union Announces Strike to Protest Job Cuts


Alcatel-Lucent (NYSE:ALU) Union Announces Strike to Protest Job Cuts

Alcatel-Lucent NYSE ALU to Protest Job CutsNEW YORK – Workers at Alcatel-Lucent (NYSE:ALU) have announced plans to walk out in protest of the company’s plans to cut over 10,000 jobs globally.  According to union official Herve Lassalle, the cuts are both ‘avoidable and amendable.’  The cuts were announced by management on October 8 in a move that Lassalle decried as an ‘absence of vision in the management suite.’

The company has their global headquarters in Paris, and their U.S. headquarters in New Jersey has been trying to work through severe liquidity issues that have increased their probability of declaring bankruptcy, as calculated by macro-axis, to almost 50 percent.

In December last year the company was able to secure a last-minute loan of € 1.6 billion ($ 2.1 billion) in the hopes that the lifeline would buy enough time to return the company to profitability.  However, the situation has not stabilized for the telecommunications equipment maker.

With the job cuts, the company hopes to speed up their turnaround bid, but the cuts following a previous round of job cuts, restructuring, and asset sales that have failed to help.  Ultimately the company is the wrong position in their market and is finding it impossible to compete against China’s Huawei Technologies (SZ: 002502) who has been successful is taking market share from higher priced competitors.

According to Alcatel CEO, Michel Combes, ‘the company and its employees are going through a difficult period,’ and he said ensuring the company’s survival is his ‘top priority.’  However, the company might be past the point of saving, and only a white knight, or the French Government, might be able to bring the company back from the brink.  In fact, Government intervention is one thing the union and management can agree on; given the unique business environment in France, this should not be ruled out.

Ultimately, Alcatel-Lucent is a company in deep trouble, and up to this point it would appear that the management team has no idea how to turn the company around.  Restructuring and asset sales make sense, but only if there is a clear vision for what the company should look like in the end.  That vision is lacking, and the continual rounds of layoff are destroying the company’s ability to fight back.  For investors, now is not the time to go long on Alcatel-Lucent.  Shares of Alcatel-Lucent were down 3 percent to $ 3.68 in pre-market trading on Tuesday.

About Eric Kelso

Eric Kelso covers market updates and stock related news.

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