TRENTON, N.J. — Lucent Technologies Inc. is offering voluntary retirement buyouts to more than 10,000 U.S.-based employees in an effort to accelerate restructuring of the struggling telecommunications giant.
The employees targeted for the offer – mostly middle-level managers but also a small percentage of nonunion clerical workers – will be notified Monday by their supervisors or through e-mail or memos, said Bill Price, a spokesman for Murray Hill-based Lucent. All of the employees are either eligible or nearly eligible for a pension.
“Our top executives are not eligible for this,” Price said, because the company wants to retain the talent needed to execute the turnaround outlined by chief executive officer Henry B. Schacht in January.
That won’t necessarily happen, analysts said.
“They’ve lost a lot of talent already” and could lose more of their best people, said telecommunications analyst Steve Levy of Lehman Brothers. “This is sort of a risk that you run when you have to get your organization to the right size.”
Stephen Koffler, an analyst at First Union Securities, agreed that buyouts often result in the good people leaving and the mediocre ones staying.
“Maybe there’s certain safeguards they’ve put in to prevent that,” he said.
News of the buyout offer comes a week after negotiations to merge with French telecommunications rival Alcatel fell apart.
“The voluntary offer is part of our effort to accelerate the restructuring” because the market for Lucent’s fiber optic and communications gear has softened, Price said. “This is a good program for our employees and a good program for Lucent.”
Earlier this year, Lucent announced plans to eliminate 10,000 other jobs as part of its restructuring and to remove another 6,000 from its payroll through the sale of factory operations. About 2,000 had been cut as of the end of March, leaving about 104,000 employees worldwide.
Eligible employees will receive a formal buyout offer on Monday and will have until July 10 to respond. If they accept, their retirement would start the next day.
Those accepting the offer will receive improvements in retirement benefits, including immediate vesting of stock options that would not have been vested for some time, although most are worthless now given the stock’s sharp tumble since Lucent’s financial problems became public in 1999.
Under the offer, employees will be eligible to retire with full pension if they have at least 15 years of service and are age 50 or older. Normally, for an employee to get a full pension, their age and years of service must total at least 75, John Skalko, another company spokesman, said.
Company sources predicted at least half of those getting the offers likely will take them and said the resulting payroll and benefit savings could total $100 million annually.
That barely touches the $2 billion in annual costs that Schacht is aiming to trim, but Levy said it still was encouraging.
“The whole idea of Lucent taking additional steps to reduce their costs, or “right-size,” is something that we’ve argued they needed to do,” Levy said. “When it comes to Lucent ... anything positive is worth noting.”
Lucent reported a $3.7 billion loss on sales of $5.9 billion for the first three months of this year.
In trading Wednesday on the New York Stock Exchange, Lucent shares closed unchanged at $8.49.