Financially strapped telecommunications giant Lucent Technologies is offering early retirement packages to more than 10,000 US-based employees in order to speed up its restructuring efforts, the company said on Wednesday.
The employees, midlevel managers not represented by a union who are eligible or nearly eligible for a pension, were notified on Wednesday, said Mary Lou Ambrus, a spokeswoman for the company. Lucent will make the eligible employees a formal offer Monday and they will have until July 10 to respond. The firm employs 104,000 people.
"This gives eligible employees an opportunity to leave the company voluntarily with enhanced benefits," Ambrus said.
Lucent will add five years of service and five years of age to eligible employee's pension calculations, she explained. That means that employees will be able to retire with full pension benefits if they have at least 15 years of service and are 50 years old or older, according to another Lucent spokesman. Currently, an employee's age plus years of service must total at least 75 to qualify for retirement with a full pension.
"This gives us an opportunity to accelerate our restructuring plan with additional head count and cost reductions designed to streamline operations," Ambrus said.
Yesterday, Henry Schacht, Lucent's interim chairman and CEO, also said the company is speeding up its efforts to cut internal costs, but he didn't disclose details during a speech at the SuperComm trade show in Atlanta. Schacht did say that implementation of the accelerated plans would start in the next few weeks.
As of March 31, Lucent had cut 2,000 of the 10,000 employees it announced in January that it would eliminate through layoffs or attrition. The other 8,000 cuts announced as part of the restructuring will be made by the end of June, according to a spokesman. The layoffs are separate from Wednesday's early retirement offer.
Wednesday's news comes a week after the collapse of merger talks with telecommunications rival Alcatel SA.
"Lucent is in desperate straits at this point," said Jim Slaby, an analyst at Giga Information Group. "They passed on Alcatel because they wanted a merger of equals. They didn't want to be just an acquisition. But that's crazy because a merger of equals doesn't work. Someone has to be the boss."
Slaby said Lucent is trying to raise cash by selling its fiber-optic cabling unit and Alcatel would probably get back in the bidding for that division. Lucent, however, isn't in a bargaining position to get the best price.
"Lucent has a big cash-flow problem," he said. "Cutting head count is a way to reduce operating expenses in the short term. Lucent will regret passing up Alcatel's acquisition offer. Eventually, they will be bought and it will make the Alcatel deal look like a sweet one."