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Through The Shift Plan, Alcatel-Lucent has successfully repositioned itself for the future by focusing on next-generation technologies and reshaping a more resilient operating model. As we enter the last year of the plan, we examine its impact in 2014.
Michel Combes
CEO, Alcatel-Lucent, commenting on Alcatel-Lucent 2014 financial results

Our 2014 results underline the success of our turnaround. Through the execution of The Shift Plan, we have improved our underlying profitability and free cash flow profile while solidifying the entire organization.

Today in 2015, we are in a strong position to capitalize on profitable growth opportunities, operational excellence and quality of service.

The achievements we have made in our product portfolio and operational transformation make us confident we will reach our positive free cash flow target in 2015.

Strength in Numbers
Alcatel-Lucent at a glance
billion
%
~
~%

The Shift Plan In Action

Refocused for Growth – Alcatel-Lucent is back in the game

With two-thirds of revenues generated by refocusing the portfolio, Alcatel-Lucent has repositioned itself to be back in the game with accelerated growth. We have clearly implemented our industrial vision of moving from a generalist to a specialist by refocusing on ultra-broadband access, IP networking and cloud.

“One of our key objectives with The Shift Plan was to refocus the portfolio and the positioning of the company into Ultra-Broadband access, IP networking and cloud and to extend that positioning into adjacent industry markets where the network matters. This has required a tremendous effort in terms of refocusing and transforming activities. These next-generation technologies now represent two-thirds of the revenue mix, and we are achieving high double-digit growth in non-telco markets.” Tim Krause, Chief Marketing Officer.

The Shift Plan emphasizes innovation in Ultra-Broadband access, IP networking and cloud technologies. These 3 areas will draw 85% of our total R&D investment in 2015.

The Significant Results
IP Networking I
IP Networking II
Ultra-Broadband Access
Cloud
IP Networking I
400G
200G+DWDM
650+
490,000+nodes
22,500+
3
IP Networking II
36
~260
~100
115
~35
6
Ultra-Broadband Access
10Million
27Customers
#2Worldwide
109+million
130+Contracts
70+
Cloud
26
2014Innovation
5
18
2014Innovation
28Petabytes
16
60
IP Networking I
IP Networking II
Ultra-Broadband Access
Cloud

Financial Strength

Alcatel-Lucent is Turning a Corner

In June 2013, we launched The Shift Plan to successfully turn around the company. Where do we stand today?
Jean Raby
Chief Financial Officer

The Shift Plan has delivered. However, early achievements don’t mean we can take our foot off the pedal. Execution and focus must be relentless. 2015 is a key year.

Capital Markets
20 months ago the company was near bankruptcy. Today, refinancing job is done with €2 billion of Capital Markets (notably debt management) transactions.
Patents
We’ve returned to full ownership of our Intellectual Property with the repayment of the 2012 patent-secured loan in August 2014.
Free cash flow
In 2014, free cash flow improved by €237 million compared to 2013. We are on track to reach our commitment of becoming free cash flow positive in 2015.
Profitability
We’ve seen strong improvement of our profitability with growth margins improving for six quarters and reaching 33.4% of revenues in 2014.
Cost savings
The Shift Plan targets €950 million in fixed cost savings. In 2014, the company achieved fixed cost savings of €675 million.

TRANSFORMATION, INNOVATION AND GROWTH

In order to amplify the execution of the turnaround and reach stronger results, 2014 has been the year of focus on Transformation, Innovation and Growth.
Our Transformation
The 'Alcatel-Lucent' Way for Operational Excellence
We are transforming the way we do business to be recognized by our customers as a leader in operational excellence. The only KPI that matters is the way our customers perceive the quality that we are delivering to them. This is why we are deepening and accelerating the adoption and rigorous application of ‘The Alcatel-Lucent Way’ which is the overarching approach to how we operate throughout the company from a quality perspective, fostering the transition to better ‘Quality of Service’.

‘The Alcatel-Lucent Way’ is based on our Quality Management System (QMS) which is at the core of driving continual improvement and transforming the way we do business to be recognized by our customers as a leader in operational excellence.

Phillipe Guillemot
Chief Operating Officer

It’s about continuing to build upon our new operating model. Our culture is now all about building trust with our customers by valuing quality at every step of our process. That is here to stay.

Our Innovation

Network 2020: Inventing the networks of the future

Through The Shift Plan, we are accelerating innovation to deliver the ultimate personalized Ultra-Broadband network that will drive the applications and behaviors of the next decade. Alcatel-Lucent with its IP division, its SDN startup Nuage Networks and Bell Labs, its industrial research arm, is demonstrating its commitment to solving the major challenges the cloud world will bring – working every day to uncover new ways to shatter physical barriers and push the limits of science to open new possibilities for communications.

The networks of tomorrow must provide ‘seemingly’ infinite capacity to consumers and businesses. This can only be achieved economically by embracing new innovative technologies like virtualization, SDN and 5G. We are defining, developing and deploying networks that have the highest performance, lowest cost per bit and are most personalized. This is driving our vision of the network – Network 2020.

“We believe that network infrastructure has to change. We're at the edge of what is physically possible.” Marcus Weldon, President Bell Labs.

Constantly pushing the boundaries of innovation
+
+

Thompson Reuters

Top 100 most innovative companies

2011, 2012, 2013, 2014

Our Growth

Unlocking Profitable Growth

Our mission is to invent and deliver trusted networks to help our customers unleash their value. The networks need to be built to achieve the potential of every customer with flexibility, speed and trust – Every success has its network. With The Shift Plan, we are unlocking profitable growth by partnering with service providers and diversifying in new market segments.
Extending our knowledge and expertise to customers in new business segments
Extra large enterprises
Network platform players
Cable providers
Utilities
Transportation
GovernmentBroadband Initiative, Public Safety, Smart Governments
Oil, mining and gas
Working for a sustainable future
The year 2014 has been a critical year in Alcatel-Lucent’s growth story. While we have refocused our business around networks, stabilized our financial position, we have, in parallel, spent time realigning our approach to responsible business innovation and ensuring it responds to the highest expectations of our customers and key stakeholders.
Michael Combes
CEO

We remain committed to judging the success of our efforts against the highest standards and globally recognized frameworks for sustainability.

2014 responsible innovation key highlights
Dow Jones Sustainability IndexIndustry group leader for technology2012, 2013, 2014
1%Of recognized top companiesAssessed by Ecovadis with Gold Recognition
UN Global Compact 100 Memberbased on sustainability performance
FROM REFOCUSING TO TRANSFORMATION for today and tomorrow
In 2014 Alcatel-Lucent made constant progress in profitability and its customer diversification strategy.

“The one certainty is that in an ultra-connected, cloud-shifted world, networks become the business calling card, revealing a company’s speed, flexibility and trustworthiness to its customers. It’s exciting to work in an industry where change is constant and to lead a company that is defining, developing and deploying the networks of tomorrow created by the convergence of IP, ultra broadband and cloud.

The takeaway is Alcatel-Lucent knows networks better than anyone else in the industry. It’s core to our being and business. Every success has its network.” Michel Combes, CEO.

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