Business Review 2007 - Alcatel-Lucent

80 Pages·2008·7.58 MB·English

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Business Review 2007
INVESTOR RELATIONS
Alcatel-Lucent
54, rue La Boétie
75008 Paris – France
www.alcatel-lucent.com
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Alcatel-Lucent
Profi le Contents
02 —— 17
Creating the Right
Conditions
02 Company Overview
04 Message from the Chairman
06 Statement from the CEO
08 Corporate Governance
10 Shareholders
12 Alcatel-Lucent’s Main Sites
14 Key Figures
16 Key Events
Alcatel-Lucent provides solutions that enable 18 —— 39
Realizing
service providers, enterprises and governments
the Possibilities
worldwide to deliver voice, data and video
18 Vision
communication services to end users.
20 Perspective: Gabrielle Gauthey
22 A View of the Market Today
24 The Alcatel-Lucent Strategy
As a leader in fi xed, mobile and converged
28 Action
30 Perspective: Sandra Ng
broadband networking, IP technologies,
32 Our Activities
applications and services, Alcatel-Lucent 34 Carrier Business Segment
36 Enterprise Business Segment
offers the end-to-end solutions that enable 38 Services Business Segment
compelling communications services for people 40 —— 67
Shaping the Future
at home, at work and on the move.
40 Innovation
42 Perspective: Malcolm Johnson
44 Generating Big Ideas
With operations in more than 130 countries,
46 Always Facing Forward
Alcatel-Lucent is a local partner with global 48 Innovation at Work
50 Human Resources
reach. The company has the most experienced
52 Perspective: Alain Bravo
global services team in the industry, and one of 54 Valuing People
56 Realizing Integration
the largest research, technology and innovation 59 A ddressing the Challenge
of Change
organizations in the telecommunications
60 Responsibility
industry. Alcatel-Lucent achieved revenues of 62 Perspective: Ann Van Dusen
64 Corporate Social Responsibility
Euro 17.8 billion in 2007 and is incorporated in
68 —— 73
France, with executive offi ces located in Paris. Financial Panorama
1 —— Alcatel-Lucent
Business Review 2007
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Creating the Right Conditions
Company Overview
2 —— Alcatel-Lucent
Business Review 2007
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3 —— Alcatel-Lucent
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Creating the Right Conditions
Message from the Chairman
THE PATH 2007 was undeniably a difficult year
for Alcatel-Lucent. The specific chal-
AHEAD lenges associated with integrating two
well-established companies were intensi-
fied by larger-scale trends affecting our
entire sector—namely, severe price com-
The telecoms industry continued
petition that offset robust increases in
its trend towards consolidation
business volume. Further complexities
last year—a trend that has unfolded
were introduced by our acquisition of
at an extremely rapid pace.
Nortel’s UMTS business and the divest-
In roughly three years, we have ment of satellite and other security
seen a widespread, large-scale activities to Thales.
merging of companies, altering
the competitive landscape As Chairman, I wish to express the
signifi cantly. Board’s appreciation to all the Alcatel-
Lucent teams that have faced these
challenges with such dedication. And I
also want to convey strongly our faith in
the future to all shareholders who have
endured this difficult period with us.
4 —— Alcatel-Lucent
Business Review 2007
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This new company plays a leading role
in the carrier segment, including the
This new company plays a delivery of associated services, and is
well equipped to expand its activities
leading role in the carrier
among enterprises, in industry and the
segment, including the delivery public sector. Our purpose is not to
of associated services, and multiply the scope of our activity, but
is well equipped to expand its rather to provide our technology to a
larger customer base, leading the way to
activities among enterprises,
new growth.
in industry and the public sector.
Our purpose is not to multiply Through the merger we have leveraged
the scope of our activity, but the best of our two formative companies—
their expertise and history. Throughout
rather to provide our technology
the challenges we have faced, our Board
to a larger customer base, has extensively evaluated and supported
leading the way to new growth. the strategy of maintaining a focused
Serge Tchuruk – Chairman portfolio of technologies. This strategy is
central to increasing the company’s long-
term value in the interest of shareholders,
customers and employees. Our Board is
committed to seeing through the imple-
mentation of management’s action plans
and taking advantage of the industry’s
growth opportunities, operating as effi-
ciently and cost-effectively as possible.
The Board has also been particularly
active in dealing with governance issues.
Concerning membership: half of our
Directors have experience in the high-
technology sector, and 11 of the 14 are
considered independent according to
the criteria of the New York Stock
Exchange. The principles of AFEP-
MEDEF are also adhered to by a vast
majority of Directors. While these
scores are quite favorable and while the
need for stability linked to the merger
process was essential, provisions of the
bylaws specifically associated with the
merger may now be removed as soon as
What is the basis for faith be fewer but larger equipment providers is practical. This is why the Board pro-
in the future? addressing a market with rapid growth poses to the vote of its shareholders a
Telecommunications is an inherently in volume. This is why we have a positive resolution to remove the requirement
dynamic market in which innovation is view of our industry in the long term. for a 2/3 supermajority vote for the
driving technological change at a very posts of Chairman and CEO. Also, the
rapid pace. The evolution of our industry Board considers that its composition,
is reshaping communications in profound Is our strategy well adapted which in large part reflects input from
ways, creating new market opportunities. to this environment? the two merged companies, may now
The merger between Alcatel and Lucent— evolve freely under the guidance of its
Telecommunications operators are consid- the largest in the sector to date—has pro- governance committee.
erably expanding the scope of their services duced a company with the ideal mix of
and becoming more global. We, their regional markets, from technology-savvy Overall, the year 2007 saw significant
suppliers, are going through a massive markets such as the U.S. to fast-developing disruptions related to the massive
consolidation process. Although not fully markets in Asia, Africa and Latin America. changes in our portfolio. These are now,
complete, this dramatic change to our The merger has also given us a comprehen- to a large extent, behind us. We on the
competitive landscape has taken place in sive, first-rate technology portfolio—essential Board are confident in this company’s
just three years—when it took decades in in a business where nearly 15% of revenues assets: its people, technology and world-
other industries—resulting in some imme- are reinvested in R&D. We are proud to be wide reach. We will do our part to
diate challenges to be addressed. Going among the top world players in what is one ensure that shareholders benefit from
forward however, it means that there will of the most sophisticated hi-tech industries. that strong potential.
5 —— Alcatel-Lucent
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Creating the Right Conditions
Statement from the CEO
YEAR ONE, AND
OUR STRATEGY
GOING FORWARD
We participate in an
industry that is central
to the global economy,
an industry transforming
itself to produce a new
wave of communication
services that are reshaping
how people live and work.
Our merger created
a true world leader in
communications with
both the capability
and the opportunity to
enrich people’s lives by
transforming the way
the world communicates.
6 —— Alcatel-Lucent
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The Year in Review leading position to support customers
in the IP transformation that is taking
Clearly, 2007 was a difficult year for our place across wireless and wireline net-
company. Carrying out a complex merger works. With respect to services, we are
we were further challenged by a highly building on our strengths as a leading
competitive market and a difficult pricing network integrator, pursuing new man-
environment. At the start of the year, aged services opportunities, providing
customer uncertainty about our product end-to-end communications and security
plans had a definite impact. Internally, our solutions, and strengthening our multi-
efforts to implement a streamlined organi- vendor maintenance capability. In the
zation model took longer than anticipated applications arena we are focusing on
and our workforce experienced disrup- high-demand areas such as multimedia,
tion as a result of many changes, including payment and messaging services.
restructuring. While we have more work To serve customers in the enterprise
to do, these major issues are behind us. market, we are strengthening our posi-
Our overall financial performance in tion, expanding into fast-growing seg-
2007 was disappointing; however, we ments such as security and investing in
saw good progress in a number of areas. sales and marketing efforts to pursue
Our wireline and services businesses attractive growth opportunities. Look-
performed solidly. The benefits of the ing at the industry and public sector
merger are reflected in the fact that each segment, we are targeting key vertical
of those segments grew faster than the markets such as transport, energy, health
market last year, with improved year- and government, including defense. At
over-year profitability. Our enterprise the same time, we are taking steps to
business also performed well, achieving establish a competitive cost structure for
good year-over-year growth. our company.
The merger enabled us to leverage the Additionally, as part of our commitment
capabilities of two R&D teams, creating to corporate social responsibility, we have
a global innovation engine focused on made it a priority to extend the benefits
developing powerful new technologies. of today’s communications technologies
Throughout the year we strengthened our to all people in developed and emerging
portfolio and bolstered our market lead- markets, bridging the digital divide.
ership in several areas including fixed
access, IP service routing, and terrestrial
We believe the
and submarine optics. Externally we reaf- Looking Ahead
long-term prospects
firmed our customer relationships; inter-
for the communication nally we executed our synergy plans. Going forward, we are committed to
industry are good. executing on our strategy to profitably
grow the business and create value for
Through our strategy,
A Strategy for Profi table Growth our shareholders. We believe the long-
we have identifi ed
term prospects for the communication
a number of catalysts Our primary objective is to profitably industry are good and we have the oppor-
for growth. We believe grow the business by following a three- tunity to play a key role in driving the
part strategy that capitalizes on our transformation that is underway in our
that through the actions
strengths and market opportunities. We industry. Through our strategy, we have
we are taking, the
will continue to build our carrier busi- identified a number of catalysts for
assets we possess, and ness in developed and emerging mar- growth. We believe that through the
the dedication of our kets; to expand our offerings of services actions we are taking, the assets we pos-
and applications to customers around sess, and the dedication of our people,
people, we are well
the world; and to strengthen our posi- we are well positioned for future success
positioned for future
tion in the enterprise, industry and on our journey.
success on our journey. public-sector markets. In each of these I conclude by thanking the Alcatel-
Patricia Russo – areas we are leveraging the breadth and Lucent teams who worked so diligently
Chief Executive Offi cer depth of our capabilities, portfolio, through a difficult year in the midst of a
innovations and people. great deal of change. And I thank our
Where our carrier business is con- customers for their confidence and our
cerned, we are already leveraging our shareowners for their support.
7 —— Alcatel-Lucent
Business Review 2007
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Creating the Right Conditions
Corporate Governance
Management Claire Pedini Frédéric Rose
Committee * Senior Vice-President President Europe,
Corporate Human Resources Africa and Asia Region
Patricia F. Russo and Communications
Andy Williams
Chief Executive Offi cer
Hubert de Pesquidoux President Services Business
Cindy Christy Chief Financial Offi cer Segment
President Americas Region and President Enterprise —
Étienne Fouques Business Segment Janet Davidson
Senior Executive Vice-President Michel Rahier Management Committee Secretary
Research, Technology, Strategy President Carrier Business Chief Compliance Offi cer,
and Corporate Marketing Segment IT and Integration Program
8 —— Alcatel-Lucent
Business Review 2007
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