and service provider gear as well as selected vertical markets will receive the most attention, the company announced Friday as it tries to regain profitability. The company had a net loss of 40 million Euros (US$53.4 million) last quarter.

The company says it will develop products in these three areas to support use of the Internet by fixed and mobile devices, ensure QoS, privacy and the integrity of billing for Web services.

In a broad description of its strategy, the company says it will strive to create an open architecture on which Web 2.0 applications can run. "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," and says it will partner and collaborate to do so.

In addition to the 1,000 white-collar layoffs, Alcatel-Lucent will terminate half of its 10,000 consultants in an effort to create nearly US$1 billion in savings over the next year.

Other product areas that will be trimmed are its CDMA 1x and GSM wireless gear, as well as ATM, ADSL and DLC. It will cut back in expenses for WiMAX, CPE, traditional core carrier infrastructure, non-IMS based carrier gear and some legacy applications.