French-US equipment manufacturer Alcatel-Lucent has outlined the details of a major corporate restructuring programme, dubbed The Shift Plan, that is designed to reduce operating costs by up to EUR1 billion (USD1.3 billion) over the next three years, while simultaneously looking to dispose of assets worth at least EUR1 billion in the short term – and a further EUR2 billion of assets in the future.
The group’s new chief executive officer Michel Combes will be responsible for implementing The Shift Plan which is also intended to see the vendor refocusing its R&D spending onto IP Networking and ‘Ultra-Broadband Access’, including what the company terms an ‘increased emphasis on co-development with major customers and partners, while at the same time significantly reducing spend on legacy technologies’. Commenting on restructuring, Mr Combes said: ‘Today we are taking comprehensive action to position Alcatel-Lucent at the heart of the digital ecosystem, a place from which we will be able properly to capitalize on our many strengths.’
Going forward, Alca-Lu intends to increase its revenue derived from Core Networking by at least 15% from EUR6.1 billion in FY 2012, to more than EUR7.0 billion in FY 2015. Further, it aims to raise its operating margins in this business segment from 2.4% last year to over 12.5% in 2015. Concurrently, the equipment maker is implementing an improved strategic focus on cash management in its fixed access, wireless and ‘other’ business segments, with a strong emphasis on investment in 4G Long Term Evolution (LTE) technology, as well as in vectoring and fibre-based access platforms. In addition, Alca-Lu plans to trim its R&D budget where it concerns legacy technologies, which a view to delivering positive operating cash flow for the segment, of more than EUR250 million in fiscal 2015.
Michel Combes took the helm on 2 April 2013 and pending a review of the group’s overall business, aims to reorganise itself into four main business units: IP Routing & Transport, IP Platforms, Wireless and Fixed Networks, which will be supported by group-wide functions focused on Operations, Sales and Strategy & Innovation, it said. The Shift Plan is designed to be self-funding (on a cash flow basis) over the 2013-2015 period.