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Alcatel-Lucent launches 'The Shift Plan' to focus on IP networking and ultra-broadband access(M2 PressWIRE Via Acquire Media NewsEdge) o The Shift Plan to reposition Alcatel-Lucent from a telecommunicationsequipment generalist to an industrial specialist in IP Networking andUltra-Broadband Access (mobile and fixed) at the heart of next-generationnetworks o The Shift Plan to refocus Group innovation, with IP Networking andUltra-Broadband Access representing 85% of R&D investment in 2015 o The Shift Plan to apply a clearly differentiated management approachto Core Networking segment (IP routing, IP transport, IP platformsand associated services) businesses managed for growth, and Accesssegment- including wireless and fixed access -- and "other " segment, managedfor cash and focused on Ultra-Broadband Access - Core Networking segment: more than 15%increase in revenues targeted to over Euro 7 billion in 2015 (2012: Euro 6.1billion); more than 12.5% (2012: 2.4%) targeted operating margin in 2015 - Access and "other" segment: over Euro250 million targeted segment operating cash flow in 2015 (2012: Euro 115million cash negative) o The Shift Plan targets Euro 1 billion in fixed cost savings and assetsales of more than Euro 1 billion over 2013-2015 o The Shift Plan targets Euro 2 billion in debt reprofiling over2013-2015 and future debt reduction of Euro 2 billion Paris -- Alcatel-Lucent (Euronext Paris and NYSE: ALU)today announces 'The Shift Plan', a detailed three-year plan to reposition theCompany as a specialist provider of IP Networking and Ultra-Broadband Access,the high-value equipment and services that lie at the heart of thehigh-performance networks of tomorrow. The Shift Plan will mobilize the full range of Alcatel-Lucent's assets andresources to achieve a decisive shift in the Group's industrial focus that willconcentrate the Company on the priorities of its telecommunications customersas they deploy next-generation networks to address the explosive growth inbandwidth-hungry data traffic. This new focus on the fast-growing businesssegments of IP Networking, cloud technologies and Ultra-Broadband Access willbe delivered by a management team organized around full profit-and-loss(P&L) and cash accountability. Importantly, The Shift Plan entails a clearly differentiated approach to themanagement of high-growth businesses -- Core Networking -- as opposed to thosethat will be managed with cash generation as the clear priority. The 'managedfor cash' businesses will include key wireless, fixed access and otherbusinesses that will play an important role in the Company's medium andlong-term development. Specifically, the Company expects that this will createenhanced opportunities for its LTE and 'FTTx' businesses. The Shift Plan will capitalize on Alcatel-Lucent's recognized innovationassets, particularly its research laboratories, Bell Labs, while equipping theCompany with the appropriate means to fulfill its ambitions. The key components of The Shift Plan include: o A refocusing of the Group's R&D spending on IP Networking andUltra-Broadband Access with an increased emphasis on co-development with majorcustomers and partners, while at the same time significantly reducing spend onlegacy technologies o Euro 1 billion in targeted reductions in the Group's fixed coststructure concentrated on actions to reduce sales, general and administrative(SG&A) expenses, refocus R&D and improve operationalefficiencies o Selective asset sales intended to generate at least Euro 1 billionover the period of the plan o Aiming at reprofiling the Group's debt (Euro 2 billion) and, once theCompany has clearly demonstrated the successful execution of The Shift Plan, afuture reduction in debt (Euro 2 billion), to guarantee over the long-termfinancial sustainability. Commenting on The Shift Plan, Alcatel-Lucent CEO Michel Combes said: "Todaywe are taking comprehensive action to position Alcatel-Lucent at the heart ofthe digital ecosystem, a place from which we will be able properly tocapitalize on our many strengths. The Shift Plan is fundamentally an industrialplan that also addresses the Group's operational and financial challenges byputting in place a strong and fully accountable leadership team with cleargoals and the appropriate levers to deliver on these goals and on ourcommitments to all stakeholders." Michel Combes added: "With The Shift Plan, which is designed to beself-funding, we are aligning realistic and deliverable ambitions with our corecompetencies. Over the next three years we are targeting Euro 1 billion offixed costs savings, and carefully defined and timed asset sales expected togenerate at least an additional Euro 1 billion." Under The Shift Plan, Alcatel-Lucent is planning to grow its revenues inCore Networking by more than 15%, from Euro 6.1 billion in 2012 to over Euro 7billion in 2015, while lifting its operating margins in this segment from 2.4%in 2012 to more than 12.5% in 2015. Over the same period, a strategic focus on cash management in wireless,fixed access and other businesses -- emphasizing investment in 4G LTE, vectoringand fiber-based access systems while significantly reducing R&D spending onlegacy technologies -- is expected to deliver positive segment operating cashflow of more than Euro 250 million in 2015. Michel Combes, who was appointed CEO on April 2, 2013, also announced thateffective July 1, Philippe Guillemot is joining Alcatel-Lucent's Leadershipteam as Senior Executive Vice President, Operations. Philippe Guillemot is ahighly-regarded professional who has worked for a number of major, globalbusinesses including Michelin and Valeo, where he held senior executive roles.He was also Chairman and CEO of Areva T&D. Pending the appropriate information and consultation processes in a numberof countries, Alcatel-Lucent's management structure will be reorganized intofour main business lines: IP Routing & Transport, IP Platforms, Wirelessand Fixed Networks. These businesses will be supported by group-wide functionsfocused on Operations, Sales and Strategy & Innovation. The Shift Plan in detail: An IP Networking and ultra-broadband specialist Alcatel-Lucent aims to refocus to manage for growth its IP Routing, IPTransport and IP Platforms businesses and associated services. Alcatel-Lucentalso plans to focus its Wireless and Fixed Access businesses on Ultra-Broadbandaccess and manage these businesses -- as well as its Other Businesses Segment --for their ability to generate cash under the plan. The Shift Plan reflects fast-changing trends in the telecommunicationsindustry, where service providers and large-scale Internet concerns handleever-expanding volumes of data as the market migrates from networks builtlargely for voice communications. Under the Plan, Alcatel-Lucent is adapting tothe evolving market by placing its IP, cloud and ultra-broadband portfolio atthe center of its operations. This will include WDM, 100G, IMS and customerexperience product lines, as well as the 'FTTx' group of fiber-basedconnectivity technologies serving homes, businesses and other types ofpremises, vectoring, the 4G LTE mobile wireless access and small-cells. Alcatel-Lucent's Bell Labs will serve as the innovation engine to facilitategrowth in these key areas. Research and Development (R&D) will beconcentrated on IP Networking and Ultra-Broadband Access, with an 8% increasein R&D from 2013 through 2015, these areas representing 85% of R&Dinvestment in 2015. Exits from legacy technologies are to be accelerated inclose cooperation with the relevant customers. The Company also plans to focuson in-house start-ups, as well as on partnerships and co-developments (suchthose as in cyber-security). Customer focus Alcatel-Lucent's new product and platform emphasis is expected to enable itto target a wider range of customers beyond its traditional base of largetelecommunications operators. The Company plans to redesign its sales and marketing strategy to takeadvantage of the new portfolio focus, identifying new and profitable marketsegments where Alcatel-Lucent's leading-edge innovations in IP and cloud willallow it to better address Tier 2 to Tier 4 service providers, benefit fromall-IP networks transformation with MSOs (Mobile Service Operators), andaddress the telecommunications needs of web-scale customers and extra-largeenterprises. The Company expects that successful implementation of The Shift Plan willimprove Alcatel-Lucent's go-to-market approach, resulting in a business that isbetter leveraged. Targeted improvements will be made in key metrics, suchas the number of sites and an increased ratio of sales through channels. Path to financial sustainability By refocusing on Core Networking, Alcatel-Lucent aims to deliver - in 2015 -revenues of more than Euro 7 billion from these businesses with an operatingmargin exceeding 12.5%. The Access segment (including patent licensing andmanaged services) and Other businesses segment (including Enterprise) areexpected to generate a positive segment operating cash flow of more than Euro250 million by 2015. Alcatel-Lucent aims at reducing its fixed-cost base by Euro 1 billionbetween 2013 and 2015 through the adoption of direct-channel operations,additional consolidation of SG&A (sales, general and administration)functions, and by refocusing its R&D capacity. Other actions will beundertaken to reduce the Company's real estate footprint, and driveefficiencies in project delivery, back-office IT systems, supply chainmanagement, manufacturing and procurement. Further exceptional cash inflows of at least Euro 1 billion are expectedfrom the selective monetization of assets, including potential disposals, overthe period of The Shift Plan. Following the establishment of a dedicated profit center forAlcatel-Lucent's intellectual property portfolio, the Company also plans toadopt an entrepreneurial approach to licensing in order to develop a solidrevenue stream from its library of more than 30,000 patents and 16,000applications. On a cash basis, The Shift Plan is expected to be self-funding over the2013-2015 period. The Plan also includes a Euro 2 billion reprofiling of the Company's debtover 2013-2015 by actively capitalizing on attractive international debt marketopportunities. Once the Company has clearly demonstrated the successfulexecution of the Shift plan, it plans to seek a reduction of its debt byapproximately Euro 2 billion including through further asset disposals orthrough access to the equity markets in order to support its long-termstrategic goals. The outlook and objectives for Alcatel-Lucent included in The Shift Planreplace the outlook referenced in the section 6.8 of the Company's 2012 Document de Rfrence . New Management and Operational structure The Shift Plan implementation entails the reorganization of Alcatel-Lucent,subject to relevant information and consultation processes applicable incertain countries. As part of this new organization, the Company will be managed by a newLeadership Team headed by CEO Michel Combes. The team will be organized asfollows: Business Lines - Basil Alwan, IP Routing & IPTransport - Andrew Mcdonald, IP Platforms - David Geary, Wireless - Federico Guillen, Fixed Networks Transversal functions - Philippe Guillemot, Operations - Philippe Keryer, Strategy &Innovation - Robert Vrij, Sales Corporate functions - Nicole Gionet, Human Resources - Tim Keller, Legal - Paul Tufano, CFO of Alcatel-Lucent,will step down from his role once implementation of The Shift Plan is underway. Michel Combes said: "Paul has played a pivotal role in the Company'sfinancial stabilization. We are extremely grateful for his dedication as CFOover close to five years. Paul has chosen to move on for personal reasons, andwe wish him the success he deserves in doing so. In the meantime, we will workclosely together to ensure a smooth succession to a new CFO." Michel Combes concluded: "The Shift Plan redefines Alcatel-Lucent'sindustrial identity and clarifies its role in the technology ecosystem. Thegoal is now set, and we can focus, with all the Alcatel-Lucent employees, onits delivery and on finally fulfilling the Company's potential to createsubstantial and enduring industrial, social and financial value for allstakeholders." Editorial note : Implementation of a number of initiatives included inThe Shift Plan is subject to the relevant information and consultationprocesses applicable in various geographies. Safe Harbor Forward-looking statements Except for historical information, all other information herein consists offorward-looking statements within the meaning of the U.S. Private SecuritiesLitigation Reform Act of 1995, as amended. These forward-looking statementsinclude statements regarding the future financial and operating results ofAlcatel-Lucent, such as for example "encouraging trends in the marketplace".Words such as "will," "expects," "looks to," "anticipates," "targets,""projects," "intends," "guidance", "maintain", "plans," "believes,""estimates," "aim," "goal," "outlook," "momentum," "continue," "reach,""confident in," "objective," variations of such words and similar expressionsare intended to identify such forward-looking statements which are notstatements of historical facts. These forward-looking statements are notguaranties of future performance and involve certain risks, uncertainties andassumptions that are difficult to assess, including broad trends not within ourcontrol such as the economic climate in the world, and in particular in thosegeographical areas where we are most active. Actual outcomes and results maydiffer materially from what is expressed or forecasted in such forward-lookingstatements, in particular with regard to product demand being as expected, ofwhich a continued significant growth in some of our activities, our ability toobtain the price we estimated by a given date for those activities we want todivest, to improve our level of free cash-flow, or to achieve all the goals ofour Shift Plan, including headcount reduction, site rationalization, and toexit unprofitable contracts and market at a reasonable cost. These risks anduncertainties are also based upon a number of factors including, among others,(1) the failure of our Shift plan to yield intended results and our inabilityto transform ourselves successfully into a cash generative business; (2) ourfailure to align our strategic plans with the direction of our customers'investments, including by properly managing the timing and volume of networkroll-outs or product introductions; (3) fluctuations in demand in thetelecommunications industry due to the timing of customers' technologydeployment, roll-outs and purchases and the impact of the economic environmentthereon; (4) our inability to procure financing for our operations at anaffordable cost or at all; (5) our exposure to the credit and commercial riskof customers; (6) the costs and risks associated with pension andpost-retirement benefit obligations and our inability to avoid unexpectedcontributions to such plans; (7) our inability to reduce market and currencyexchange risk through the use of derivative financial instruments; (8)impairment of goodwill or other intangible assets; (9) our inability to operateeffectively in a highly competitive industry and to correctly identify andinvest in the technologies that become commercially accepted; (10) our relianceon a limited number of suppliers for the components we need; (11) ourvulnerability to information system risks, data protection breaches,cyber-attacks and industrial espionage; (12) our inability to efficientlyco-source or outsource certain business processes and more generally controlour costs and expenses; (13) our failure to detect defects, errors, failuresand quality issues that could affect customer satisfaction and any resultingreputational harm; (14) rapid changes to existing regulations or technicalstandards; (15) our reliance on a limited number of customers and the risksinherent in long-term sales agreements; (16) the social and political risks wemay encounter in any region of our global operations; (17) our inability toprevent damage to existing undersea infrastructure in the course of installingand maintaining other telecommunications cable networks; (18) existing andfuture litigation; (19) our inability to realize the full value of our existingand future intellectual property portfolio in a complex technologicalenvironment (including defending ourselves in infringement suits and licensing,on a profitable basis, our patent portfolio); (20) risks inherent to jointventure management; and (21) compliance with environmental, health and safetylaws, and the impact of each of these factors on our results of operations andcash. For a more complete list and description of such risks and uncertainties,refer to Alcatel-Lucent's Annual Report on Form 20-F for the year endedDecember 31, 2012, as well as other filings by Alcatel-Lucent with the U.S.Securities and Exchange Commission. Except as required under the U.S. federalsecurities laws and the rules and regulations of the U.S. Securities andExchange Commission, Alcatel-Lucent disclaims any intention or obligation toupdate any forward-looking statements after the distribution of thispresentation, whether as a result of new information, future events,developments, changes in assumptions or otherwise. About Alcatel-Lucent (Euronext Paris and NYSE: ALU) The long-trusted partner of service providers, enterprises and governments around the world, Alcatel-Lucent is a leading innovator in the field of networking and communications technology, products and services. The company is home to Bell Labs, one of the world's foremost research centers, responsible for breakthroughs that have shaped the networking and communications industry Alcatel-Lucent innovations are regularly recognized by international institutions for their positive impact on society. In 2012 and for the second year running, Alcatel-Lucent was named one of the Thomson Reuters Top 100 Global Innovators, recognition for the company's continued addition to its world-class patent portfolio, one of the largest in the telecom industry. Alcatel-Lucent has also been recognized for its sustainability performance. In 2012 the company was ranked Technology Supersector Leader by the Dow Jones Sustainability Index. Through its innovations, Alcatel-Lucent is making communications more sustainable, more affordable and more accessible as we pursue our mission of Realizing the Potential of a Connected World With operations throughout the world, Alcatel-Lucent is a local partner with global reach. The Company achieved revenues of Euro 14.4 billion in 2012 and is incorporated in France and headquartered in Paris For more information, visit Alcatel-Lucent on: http://www.alcatel-lucent.com , read the latest posts on theAlcatel-Lucent blog: http://www.alcatel-lucent.com/blog and follow the Companyon Twitter: http://twitter.com/Alcatel_Lucent . ((M2 Communications disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.com on the world wide web. Inquiries to [email protected])). (c) 2013 M2 COMMUNICATIONS |