Article 43

 

Tuesday, September 02, 2008

No Americans For Alcatel-Lucent’s Top Spots

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Alcatel-Lucent Names New CEO And Chairman

By Dominique Vidalon
Additional reporting by Blaise Robinson and Cyril Altmeyer in Paris, Kate Holton in London; Editing by Greg Mahlich, Tim Hepher
Yahoo News
September 2, 2008

Alcatel-Lucent named its new leadership on Tuesday, handing the task of turning round the loss-making telecom’s equipment group to former British Telecom chief executive and industry veteran Ben Verwaayen.

The appointment of Verwaayen as chief executive, coupled with the hiring of French business grandee Philippe Camus as non-executive chairman, comes a month after investors forced the current managers out following a series of profit warnings.

The world’s biggest provider of fixed-line telecoms networks, which has been losing market share amid a tough market and fierce competition from key rivals such as Ericsson , has seen its market value drop more than 60 percent in the 21 months since Alcatel and Lucent merged.

The company said Camus, 60, a senior partner at French media group LARGARDERE, would replace Serge Tchuruk as of October 1, while Verwaayen, 56, would take over as chief executive replacing Patricia Russo.

Camus will keep his position at Lagardere, the company said.

Investors have been pushing hard for many months to GET RID OF RUSSO and Tchuruk and the stock has regained 30 percent since their departures were announced. But it remains 60 percent below its December 2006 level.

By 6:32 a.m. EDT the shares were down 1.9 percent at 4.225 euros, off an earlier low of 4.06 euros and giving the company a market capitalization of around 10 billion euros ($14.5 billion), as some investors pocketed their profits.

“The appointment comes quicker than the market had expected. The stock has recently been rising on hopes of a new management team capable of a turnaround. Now that the announcement has been made, there is no more (price) catalyst” one trader said.

“The board reacted swiftly. They found a CEO who has a good international experience and in the telecoms sector,” said Exane BNP Paribas analyst Alexander Peterc.

“Camus will be a truly non-executive chairman, so conflicts seen in the past are more unlikely to repeat themselves,” he added.

Camus, a French national and now a U.S. resident as a partner at New York investment firm Evercore Partners (EVR.N), is best known as an architect and founding co-chief executive of European aerospace group EADS, serving between 2002 and 2005. He is co-managing partner of French media group Lagardere, a major shareholder in EADS.

PROBLEMS

The complexity of the controversial transatlantic merger deal, a clash of corporate cultures and dire market conditions were partly to blame for Alcatel-Lucent’s woes, analysts have said.

Alcatel-Lucent also took too long to select its combined technology portfolio, SPOOKING CUSTOMERS, while management, which LOST KEY PEOPLE after the merger, struggled to remain focused, they say.

Verwaayen, a Dutch national, has extensive experience in the telecoms industry and the problems at Alcatel-Lucent will be familiar to him.

“I’m truly delighted to become the CEO of Alcatel-Lucent, leading a company with vast assets and great talents, while recognizing the difficulties and challenges ahead,” Verwaayen said in a statement.

“I am committed to building significant and sustainable value for our shareholders, customers and employees,” he added.

During a brief conference call Verwaayen gave no clues on future strategy other than to say that one of the industry’s problems was that “there are too many platforms,.” He also said JOB CUTS were ”NEVER A GOAL in itself.”

His predecessor Russo had promised shareholders she would learn to speak French, but she did not have time to master the language.

Verwaayen’s office will be in the company’s headquarters in Paris. Asked about his French, he said he spoke well enough to buy bread when holidaying in Provence, where he has a house.

While Russo will leave with a pay-off of up to SIX MILLION EUROS, Verwaayen will have no golden parachute.

He will receive a fixed remuneration of 1.2 million euros plus a targeted bonus of 1.8 million euros, options and free shares tied to to performance criteria, documents available on Alcatel-Lucent Web site showed.

Verwaayen joined BT in 2002 as the former British fixed line monopoly emerged from a massive restructuring process and deep cost cuts.

During his time he helped avoid a break-up of the group at the hands of regulators and then spearheaded the drive into networked IT services and broadband which helped to double the group’s share price between 2004 and 2007.

Prior to that he spent four years at Lucent Technologies and before that he was at Dutch telecoms operator KPN when it was still both a post and telecoms group. He also worked at ITT, a predecessor of Alcatel.

SOURCE

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The End Of The Pat Russo Chapter

By Ed Gubbins
Telephony Online
September 3, 2008

There’s been a fair amount of ink already spilled about Alcatel-Lucent’s new CEO, Ben Verwaayen. And I would add to that din the still-notable point that his background as the CEO of a major incumbent carrier, BT, gives the megavendor a unique claim to understand its customers’ concerns.

Mark Sue, analyst with RBC Capital Markets, said the leadership change “should help stabilize the beleaguered company,” but that “the situation still remains challenged ... a full recovery is not underway anytime soon.”

Whatever reform Verwaayen brings is likely to be aided with an axe - a sad prospect for Lucent veterans in particular, who have been living with one round of layoffs after another for as long as I can remember.

Less talked about is where this change leaves the legacy of Pat Russo and the chapter of the company’s story under her watch. Whatever score the judges give her, she deserves high marks for the degree of difficulty in this routine. Russo took Lucent and Alcatel-Lucent through their most difficult years. And she had the Herculean task of melding Alcatel and Lucent together. (The hyphen only did some of the work).

“I think [Russo] deserves credit for even agreeing to take this merger on,” said Lisa Pierce, vice president of Forrester Research. “Most mergers fail to deliver the synergies they promise. From a deep, deep cultural perspective, this particular merger faced significantly greater obstacles.”

But the truth is that Lucent was plagued by plenty of culture clashes and internal conflicts long before Alcatel came to dinner. Before the megamerger, Lucent made some 40 acquisitions in just a handful of years and wasn’t adept at quickly assimilating them.

Whatever Russo’s efforts and accomplishments, she was well rewarded for them, having been repeatedly cited as one example of the gross disparities between executive pay and corporate performance. And so it’s no surprise that she made plenty of enemies among Lucent’s retirees, who saw their benefits cut as her bonuses grew.

You could say Russo had an easy act to follow, replacing former CEO Rich McGinn, who was widely derided for trying to change the company too drastically too fast, tripping along the way (and provoking legal troubles that were, sadly, not unusual among Lucent’s peers in that era).

In 2004, two years into Russo’s reign, author Lisa Endlich (who literally wrote the book on Lucent) told me, “[Russo] has very realistic visions of what Lucent can achieve. She’s extremely well-matched to the times. She’s made the changes that [McGinn] didn’t get around to making. Lucent will probably evolve to be more like McGinn’s vision under her.”

It’s now up to Verwaayen to make the changes that Russo couldn’t.

Posted by Elvis on 09/02/08 •
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