Alcatel-Lucent's new CEO Michel Combes has announced his strategic plans for the company. Termed 'The Shift Plan', the three-year strategy will narrow the company's focus to IP networking and ultra-broadband access. This will include WDM, 100G, IMS and customer experience product lines, as well as the FTTx group of fibre-based connectivity technologies serving homes, businesses and other types of premises, vectoring, LTE mobile wireless access and small cells. Alcatel-Lucent will work more on co-development with partners and customers in these areas and significantly reduce spending on and exit other product lines.
Under the new strategy certain key businesses in wireless, fixed access and other areas will be managed with a focus on cash generation, in order to create resources for investing in new technologies such as LTE, vectoring and FTTx. Bell Labs will lead the R&D effort, with spending expected to increase 8 percent from 2013 to 2015. The target is for the new focus areas to account for 85 percent of R&D in 2015. Alcatel-Lucent also wants to focus more on in-house start-ups.
Overall the Core Networking activities are expected grow by more than 15 percent, from EUR 6.1 billion in revenues 2012 to over EUR 7 billion in 2015, while the operating margin increases from 2.4 percent to more than 12.5 percent over the same period. In addition, cost reductions of EUR 1 billion on SG&A and operational efficiencies are targeted, as well as EUR 1 billion in proceeds from selling assets.
The CEO also plans a refinancing of EUR 2 billion in debt in the near term, followed by a debt reduction of EUR 2 billion once the Shift Plan has started paying off. Overall the plan is expected to be self-financing, with no need to raise additional debt or capital.
Alcatel-Lucent also announced the appointment of Philippe Guillemot as Senior Executive Vice President, Operations. The French executive has held top roles at Michelin and Valeo and served as CEO of nuclear energy group Areva T&D. Under the new company structure, Alcatel-Lucent will have four product divisions (IP Routing & Transport, IP Platforms, Wireless and Fixed Networks) and three group service divisions (Operations, Sales and Strategy & Innovation).
