These are tough times for Europe’s telecom-equipment makers. Weakening demand for hardware and intensifying competition from Chinese gear manufacturers Huawei Technologies and ZTE are taking a toll on some of the region’s top companies, judging from news out of Europe today.
Unprofitable phone-equipment maker Alcatel-Lucent SA will need to eliminate 10,000 positions to catch up with more efficient rivals as the company’s cash pile shrinks, according to data compiled by Bloomberg. The Paris, France-based company announced plans to cut 5,500 jobs in October. (Recall that Nokia Siemens Networks, the venture between Finland’s Nokia and Germany’s Siemens, announced plans a year ago to slash 23 percent of its workforce as phone-equipment sales in Europe declined.)
Swedish mobile-phone network maker Ericsson underscored the malaise today, too, saying that equipment is underperforming services. The market for hardware will grow by an average of 3 percent to 5 percent a year through 2015, while services will expand 5 percent to 7 percent.
At least one of the region’s service providers is showing signs of strain as well. Partly because clients are spending less on calls, Telefonica Czech Republic said third-quarter profit fell 20 percent. Telefonica Czech has been streamlining operations and laying off employees to battle a steady decline in earnings, which peaked in 2005.