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Alcatel-Lucent to cut cost and focus on networking products

The new 'Shift Plan' focuses on the fast-growing business segments of IP Networking, cloud technologies and Ultra-Broadband Access.

By CBR Staff Writer

Alcatel-Lucent revealed plans to sell about €1bn worth of unspecified assets and trim down with a further €1bn in cost cuts, as part of its efforts to return to profit by 2015.

The new ‘Shift Plan’ also includes €2bn in debt re-financing, followed by an additional €2bn in debt reduction including issuing new shares.

Alcatel-Lucent’s new plan shifts its focus on the fast-growing business segments of IP Networking, cloud technologies and Ultra-Broadband Access.

The new plan also aims to improve the operating margins on IP networking from the current 2.4% to about 12.5%, while making the firm free-cashflow positive by 2015.

Alcatel-Lucent CEO Michel Combes said that the ‘Shift Plan’ is fundamentally an industrial plan that also addresses the company’s operational and financial challenges.

"With The Shift Plan, which is designed to be self-funding, we are aligning realistic and deliverable ambitions with our core competencies," Combes said.

"Over the next three years we are targeting Euro 1 billion of fixed costs savings, and carefully defined and timed asset sales expected to generate at least an additional Euro 1 billion."

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Under The Shift Plan, the company also plans to boost its revenues in Core Networking by more than 15%, from €6.1bn in 2012 to over €7bn in 2015, while mounting its operating margins in the segment to more than 12.5%.

Alcatel-Lucent is also anticipating that the strategic focus on cash management in wireless, fixed access and other businesses would deliver positive segment operating cash flow of over €250m in 2015.

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