Alcatel-Lucent to Cut 5,000 Jobs After Quarterly Loss

The company, created in the 2006 merger of Alcatel of France and Lucent Technologies of the United States, announced the job cuts as it reported a 254 million euro, or $312 million, loss for the second quarter.

Its sales fell 7.1 percent from the period a year ago, to 3.55 billion euros.

Ben Verwaayen, Alcatel-Lucent’s chief executive, described the cuts as necessary because of weaker demand for network equipment and rising competition from lower-cost rivals. The cuts, Mr. Verwaayen said, would be made by the end of 2013 in all parts of the company except research and development.

“It is clear from the deteriorating macro environment and the competitive pricing environment in certain regions challenging profitability that we must embark on a more aggressive transformation,” he said.

Martin Nilsson, an analyst at Handelsbanken, a bank in Stockholm, said Alcatel-Lucent was feeling the effects of declining demand in North America, its biggest market, for network gear that runs on the code division multiple access, or C.D.M.A., standard, which is being phased out by Verizon Wireless, the market leader in the United States.

Alcatel-Lucent’s revenue from North America, which accounted for 39 percent of its sales, fell 8.3 percent in the quarter, to 1.4 billion euros.

“The whole sector has been weak, but Alcatel-Lucent has the most vulnerable position,” Mr. Nilsson said. “The C.D.M.A. business is disappearing and the company in wireless equipment doesn’t really have much of a major presence outside the U.S. market.”

Mr. Verwaayen said the job cuts were part of a plan to prepare the company for slower growth in markets worldwide, which has pushed some of the company’s competitors, like Nokia Siemens Networks and Ericsson, to cut jobs or report losses.

In a conference call with analysts, Mr. Verwaayen said he would review all facets of Alcatel-Lucent’s operations with an eye to abandoning unprofitable geographic markets and product and service lines.

In managed services, an outsourcing business in which Alcatel-Lucent runs part or all of the grids for network operators, Alcatel-Lucent will look to renegotiate or cancel about a quarter of its contracts around the world, he added.

While the company declined to specify where the jobs would be cut, Mr. Verwaayen said the reductions would fall across the global organization of 76,000 workers, even in France, its home base, where the Socialist government is trying to prevent further job losses.

“We have a pretty good track record of being stubborn and going through the process in every single jurisdiction that we’re in,” Mr. Verwaayen said. “We will have this program signed, sealed and delivered by the end of 2013.”

Shares of Alcatel-Lucent closed down 6 percent in Paris.

To increase revenue, Mr. Verwaayen said Alcatel-Lucent would create a separate business division to manage the company’s 44,000 telecommunications patents, of which 29,000 were developed at Lucent’s Bell Labs.

The company posted 140 million euros in licensing revenue in 2011 from the portfolio, which the chief financial officer, Paul Tufano, described as “weak” compared with its rivals.