PARIS, December 12 /PRNewswire/ --     Alcatel-Lucent (Euronext Paris and NYSE: ALU) today announced its
strategic plan to enable service providers, enterprises and end-users to take
greater advantage and gain more value out of today's web environment as well
as its next evolution.

Strategy

Alcatel-Lucent's plan is to combine the trusted capabilities of the
network environment with the creative communications services of the web (Web
2.0, Web 3.0 and beyond). This transformation will allow billions of
customers to use millions of websites from any device guaranteeing security,
quality, privacy and billing integrity. The overall service experience for
end-users - consumers and businesses - will be improved and greater value
will be created for every player in the industry.

This strategy requires providing an open environment, which does not
exist today, where all these trusted capabilities can be available between
the network and "over-the-top" applications typical of Web 2.0. It is a
challenge that Alcatel-Lucent is uniquely positioned to address, with its
long-standing relationship with network-based service providers and thousands
of enterprises worldwide, its capabilities in delivering fixed and mobile
broadband, flat-IP networks and its end-to end integration capabilities
around the globe.

In order to achieve this strategy, Alcatel-Lucent will undergo a major
strategic transformation and will take some significant steps to realign its
operations. The company will be focusing on three markets: service providers,
enterprises, and selected verticals and on four key areas of investment: IP,
Optical, mobile and fixed Broadband and Applications enablement.

"We will work closely with our service provider, enterprise customers and
applications providers to make this strategic transformation happen. We want
to stimulate a sustainable business model for the industry that will fuel
innovation and the capital investment required to expand the overall web
experience to more people and businesses. Alcatel-Lucent is committed to
innovate, collaborate and partner to achieve this goal," said Ben Verwaayen,
CEO of Alcatel-Lucent.

Product portfolio

Alcatel-Lucent will accelerate the shift of investments towards
next-generation platforms:

- by reinforcing areas of leadership (IP, Optics, broadband access, IMS
      core, CDMA EV-DO)
    - by boosting investment in focus areas (LTE, W-CDMA, Enhanced packet
      core, Open application enablers)
    - by streamlining its product offerings on mature portfolios such as CDMA
      1x, GSM, ATM, ADSL, DLC and legacy applications.



Alcatel-Lucent will be partnering, co-sourcing and participating
in the consolidation of the industry to reduce spending for WiMAX, CPE,
classic core, non-IMS based fixed NGN portfolio and some legacy applications.

Other actions will be taken to have a more agile R&D, such as further
simplifying the Carrier Product Group from 6 to 4 divisions, completing
platform rationalization program for W-CDMA and NGN as well as consolidating
global R&D centers.

Cost reduction initiatives

Alcatel-Lucent will initiate a set of strong actions designed to
reduce the company's break-even point by Euro 1 billion per year in both 2009
and 2010. These actions will aim to:

- Improve gross margin by reducing its manufacturing, supply
      chain and procurement costs, introducing stricter pricing discipline
      and over time, improving the product mix.

    - Enhance R&D efficiency by focusing on four key segments
      (Optical, IP, broadband and Applications enablement) and partnering or
      rationalizing spend in other areas.

    - Materially reduce SG&A expenses both in absolute terms and as
      percentage of revenue, through the de-layering of the organization and
      the elimination of sales duplication between product groups and
      regions.



As a part of these initiatives, Alcatel-Lucent expects to reduce
the number of managers by approximately 1,000 and the number of contractors
by approximately 5,000. The company will also complete its existing
restructuring initiatives as well as seek savings in real estate, support
functions and discretionary spending.

Altogether, Alcatel-Lucent expects that, by the fourth quarter 2009 on a
run rate basis, it should achieve total savings of Euro 750 million at
constant exchange rate, of which approximately one-third in the cost of goods
sold and two-thirds in R&D and SG&A expenses.

Guidance and targets

For full year 2009, Alcatel-Lucent expects the market for
telecommunications equipment and related deployment services to be down
between 8% and 12% at constant exchange rate and expects to maintain a stable
market share. As a result of the expected decline in volumes and given that
the improvement in gross margin will only materialize towards the end of the
year, the company's initial forecast is to achieve an adjusted operating
profit around break-even in 2009.

In 2010, with the set of actions described above, Alcatel-Lucent is
targeting to achieve a gross margin in the mid thirties range and an
operating margin in the mid single-digit range.

Looking beyond, the goal of the company is to achieve a gross margin in
the mid to high thirties range and an operating margin in the mid to high
single-digit range in 2011.

"The new management team is committed to rapidly executing this new
strategy and leveraging the new streamlined organization. We are focused on
delivering results and restoring profitability. I am confident we have now
the strategy and the strengths to succeed," said Ben Verwaayen, CEO of
Alcatel-Lucent.

About Alcatel-Lucent

Alcatel-Lucent (Euronext Paris and NYSE: ALU) is the trusted
partner of service providers, enterprises and governments worldwide,
providing solutions that deliver voice, data and video communication services
to end-users. A leader in fixed, mobile and converged broadband networking,
IP technologies, applications and services, Alcatel-Lucent leverages the
unrivalled technical and scientific expertise of Bell Labs, one of the
largest innovation powerhouses in the communications industry. With
operations in more than 130 countries and the most experienced global
services organization in the industry, Alcatel-Lucent is a local partner with
a global reach. Alcatel-Lucent achieved revenues of Euro 17.8 billion in 2007
and is incorporated in France, with executive offices located in Paris. For
more information, visit Alcatel-Lucent on the Internet:
http://www.alcatel-lucent.com

SAFE HARBOR FOR FORWARD LOOKING STATEMENTS

Except for historical information, all other information in this press
release consists of forward-looking statements within the meaning of the US
Private Securities Litigation Reform Act of 1995, as amended. These forward
looking statements include statements regarding the future financial and
operating results of Alcatel-Lucent such as (i) expected gross margin
improvements in 2009 and 2010, (ii) a lowering of the Company's breakeven
point by Euro $ 1 billion in both of 2009 and 2010, (iii) a decline in
revenues in 2009 and (iv) breakeven adjusted operating profit in 2009. Words
such as "expects," "anticipates," "targets," "projects," "intends," "plans,"
"believes," "estimates," variations of such words and similar expressions are
intended to identify such forward-looking statements which are not statements
of historical facts. These forward-looking statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions
that are difficult to assess. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such
forward-looking statements. These risks and uncertainties are based upon a
number of important factors including, among others: our ability to execute
on our new strategic plan; our ability to reduce R&D by 14% by the end of
2009, meeting our target of reducing spending on selling, general and
administrative expenses to approximately Euro 2.5 billion by the end of 2009;
our ability to operate effectively in a highly competitive industry with many
participants; our ability to keep pace with technological advances and
correctly identify and invest in the technologies that become commercially
accepted; difficulties and delays in achieving synergies and cost savings;
exposure to the pricing pressures in the regions in which we sell; the
pricing, cost and other risks inherent in long-term sales agreements;
exposure to the credit risk of customers; reliance on a limited number of
contract manufacturers to supply products we sell; the social, political and
economic risks of our global operations; the costs and risks associated with
pension and postretirement benefit obligations; the complexity of products
sold; changes to existing regulations or technical standards; existing and
future litigation; difficulties and costs in protecting intellectual property
rights and exposure to infringement claims by others; compliance with
environmental, health and safety laws; the economic situation in general
(including exchange rate fluctuations) and uncertainties in Alcatel-Lucent's
customers' businesses in particular; customer demand for Alcatel-Lucent's
products and services; international growth; conditions and growth rates in
the telecommunications industry; and the impact of each of these factors on
sales and income. For a more complete list and description of such risks and
uncertainties, refer to Alcatel-Lucent's Form 20-F for the year ended
December 31, 2007, as well as other filings by Alcatel-Lucent with the US
Securities and Exchange Commission. Except as required under the US federal
securities laws and the rules and regulations of the US Securities and
Exchange Commission, Alcatel-Lucent disclaims any intention or obligation to
update any forward-looking statements after the distribution of this news
release, whether as a result of new information, future events, developments,
changes in assumptions or otherwise.