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Alcatel-Lucent will cut WiMAX investment to reduce costs

Alcatel-Lucent will cut its investment in WiMAX to reduce costs, instead pinning its fourth-generation mobile broadband hopes on the rival LTE technology

Alcatel-Lucent will cut its investment in WiMAX as it tries to reduce costs. Instead, it will pin its fourth-generation mobile broadband hopes on the rival LTE (Long Term Evolution) technology aimed at telecommunications operators, it said Friday.

The telecommunications sector is going through some tough times: Alcatel-Lucent expects the market for equipment and related deployment services to drop by between 8 percent and 12 percent at constant exchange rates, forcing manufacturers to adapt their business plans.

Alcatel-Lucent will reduce spending on WiMAX by "partnering, co-sourcing and participating in the consolidation of the industry," it said. Other areas that will meet the same fate include customer premise equipment, some legacy applications, and the company's portfolio of fixed-line telecommunications products not based on the IMS (IP Multimedia Subsystem) core.

On the other hand, it will continue to push include broadband access, IMS core and CDMA (code-division multiple access) EV-DO (Evolution-Data Optimized) network infrastructure equipment, and will boost investments in LTE and 3G (third generation) mobile networking equipment, enhanced packet core equipment and open application enablers.

The company also unveiled a number of actions to cut costs by EUR1 billion (US$1.3 billion) in 2009 and 2010, and to achieve an adjusted operating profit around break-even next year.

These include reducing the number of managers by around 1,000 and the number of contractors by around 5,000. It also plans to reduce its R&D, manufacturing, supply chain, procurement and administrative costs.

Alcatel-Lucent's board has also appointed four new directors to help it through the changes, drawing on figures from the worlds telecommunications and IT security, and government.

Louis Hughes will chair the newly formed Technology committee of the board. He is CEO of IT security systems vendor GBS Laboratories, and has previously worked at Lockheed Martin and General Motors.

Jean Monty will chair the board's Audit and Finance committee, and is the former Chairman and CEO of telecommunications operator BCE.

The other two new directors are Olivier Piou, CEO at smartcard manufacturer Gemalto, and Stuart Eizenstat, a partner with law firm Covington & Burling LLP, and a former Deputy Secretary at the US Department of the Treasury.