Lucent Says More Than 8,500 Workers Took Buyouts

Jul 12 2001

Struggling telecommunications equipment maker Lucent Technologies said on Thursday more than 8,500 employees accepted a voluntary retirement offer, fewer than the more than 10,000 administrative and managerial workers who were eligible.

Lucent, which is slashing its workforce by almost 20 percent via the buyout and other job cuts, said last month it would offer the buyout to U.S. management employees -- ranging from entry-level clerical workers to mid-level executives -- who are eligible for retirement, or close to it.

Lucent's shares were up 11.4 percent, or 69 cents, at $6.74 in Thursday trading on the New York Stock Exchange. Over the past year, they have underperformed the Standard & Poor's 500 and S&P Communications Equipment indexes by about 86 percent and 45 percent, respectively.

In addition to the buyout, the Murray Hill, New Jersey-based company has already announced plans to eliminate 10,000 positions and sell certain units. Sources close to the company told Reuters last month that Lucent plans additional job cuts that could number in the thousands.

``This voluntary offer has enabled us to not only accelerate our restructuring plan, but give eligible employees the opportunity to leave the business with added benefits,'' Lucent said in a statement. ``We are well on target with our previously announced work force reductions from January.''

The company said it would give a full report of its work force reductions, as well as the financial impact of the cuts, when it reports its third-quarter earnings on July 24.

In January, the company launched its restructuring, saying it would cut 10,000 jobs from 106,000. The cuts through the voluntary retirement offer will reduce the workforce to about 87,500.

Lucent also plans to sell its fiber-optic cable unit and two plants, which would cut another 12,000 jobs, bringing total employment to 75,500.

Eligible employees, who had until July 10 to accept the retirement buyout, will receive an extra five years of service to their tenure with the company and five years to their age, resulting in a richer pension package, Lucent said. Top officers were not eligible for the buyout.

After ending merger talks with French telecom equipment maker Alcatel at the end of May, Lucent moved to accelerate its internal restructuring plan. The next phase of the turnaround will include more cost reductions, product cuts, financing issues and additional possible plant sales, Chairman Henry Schacht said last month.

The company said on Tuesday it would restructure its businesses into wireline and wireless groups over the next few weeks in order to rebuild sales amid the telecom slowdown.

Lucent said the restructuring will include management changes at the top of its products and sales operations, and the eventual retirement of a senior division chief, Jeong Kim, head of its optical networking unit.

The company, which posted $4.7 billion in losses during the first half of its fiscal year and has moved to cut costs and restructure its operations to return to profitability, is now organized around several product lines and sales channels.

The wireline group will serve long-distance carriers, Baby Bells and emerging carriers, while the second group will serve wireless service providers.

Analysts have said Lucent must pare its debt, sell non-core businesses such as its fiber optic unit and cut more jobs. Under the terms of a recent credit pact, Lucent must raise $2 billion in cash from non-operating sources by Sept. 30 in order to complete the spinoff of its stake in optical components maker Agere Systems.