Alcatel-Lucent (ALU) said today that it wants to transform itself from a telecommunications generalist into an IP networking and broadband access specialist. The company’s new CEO Michel Combes said that these two business areas will represent 85% of the firm’s research and development expenditures within two years, and that Alcatel-Lucent will reorganize around these priorities.
Shift Plan is the name of Alcatel-Lucent’s new strategy. The core networking segment, including IP routing, IP transport, and IP platforms and associated services, will be managed for growth. The wireless and fixed access businesses will be managed for cash flow. Alcatel-Lucent plans to sell assets worth a billion Euros over the next two years, and to realize another billion Euros in cost savings.
The company says its reorganization reflects a changing market in which service providers are migrating away from networks built primarily for voice communications. The company says that going forward its IP, cloud and ultra-broadband portfolio units will be at the center of its business. This includes its fiber-based connectivity unit and its small cell business, among others.
Like almost all reorganizations, this one includes changes in top management. Basil Alwan will head the IP routing & IP transport business, Andrew Mcdonald will lead IP platforms, David Geary will be in charge of wireless, and Federico Guillen will be in charge of fixed networks. Philippe Guillemot will be chief operating office, Philippe Keryer will lead strategy and innovation and Robert Vrij will be the head of sales.
Alcatel-Lucent was formed in 2006 by the merger of Alcatel and Lucent Technologies. The company has struggled in recent years, and Combes says that one of the goals of Shift Plan is positive cash flow by 2015. Layoffs will almost surely be part of his plan, but today he did not provide any specifics about that, saying simply that he plans to talk with labor unions.
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