Workforce cuts predicted in wake of Lucent merger

Combined company aims to reduce staffing by 10 percent

By: Lauren Otis
   Murray Hill-based Lucent Technologies has announced a formal merger agreement with French communications firm Alcatel.
   If the merger is approved by regulators and shareholders on both sides of the Atlantic, the two companies would combine to form a global communications giant with revenues of approximately $25 billion and a market capitalization of about $36 billion, according to Lucent.
   The new company, which has yet to be named, would seek to reduce its combined global workforce of about 88,000 employees by 10 percent, said Joan Campion, a Lucent spokeswoman. Lucent currently has a total of 6,400 employees in New Jersey, including those at its famed Bell Labs research and development facility, said Ms. Campion.
   "At this point in time it is too early to tell" how many New Jersey employees will be let go, she noted.
   "The expected (workforce) reduction will take place across the entire business and all of the regions," Ms. Campion said. Reductions in each region, including New Jersey, would only be arrived at after a thorough analysis of customer needs and competitive cost structure, she said. This will not happen for 6 to 12 months, the point at which the merger is expected to close, said Ms. Campion. "We can start the integration process only after (the merger) has been approved, she said.
   The combined company would be based in Paris, although its North American operations and the Bell Labs research and development facility would remain headquartered in Murray Hill, according to Ms. Campion.
   Patricia Russo, Lucent’s chairman and CEO, would become chief executive of the new combined company. In a statement, Ms. Russo said, "The strategic logic driving this transaction is compelling. The communications industry is at the beginning of a significant transformation of network technologies, applications and services.
   "This presents extraordinary opportunities for our combined company to accelerate its growth," Ms. Russo said. "The combination creates a new industry competitor with the most comprehensive portfolio that will be poised to deliver significant benefits to customers, shareholders and employees."
   Under the terms of the agreement, Lucent shareholders will receive 0.1952 of an Alcatel American depository share, valuing Lucent stock at approximately $3 a share based on Alcatel’s closing price on Friday. The merger will require approval by the U.S. Treasury Department’s Committee on Foreign Investment in the United States, as well as anti-trust approval by the U.S. Justice Department. Two-thirds of Alcatel shareholders, and a simple majority of Lucent shareholders, must approve the merger for it to go through, said Ms. Campion.
   Lucent and Alcatel previously engaged in merger discussions, but those talks ended in 2001 after executives could not agree on how to integrate the two communications giants.