Lucent Brings Back Former Exec As CEO

Lucent Technologies Inc. settled on a new CEO Monday, picking returning Lucent veteran Patricia Russo to take the helm from Henry Schacht, who's run the telecommunications equipment vendor on an interim basis since October 2000. Schacht will stay on as chairman to advise Russo during a transition period, which Schacht said he expects to be less than a year.

Russo, 49, will rejoin Lucent from Eastman Kodak Co., where she'd been serving president and chief operating officer since leaving Lucent in August 2000. Before her departure, Russo had been an executive vice president and CEO of Lucent's Service Providers Networks division.

Russo will oversee a corporate restructuring initiated by Schacht to reverse the ailing vendor's fortunes. Lucent warned investors last month that revenue for its fiscal 2002 first quarter, ended Dec. 31, would be less than half what it was a year ago, below analysts' already lowered expectations. Lucent posted a loss of $16.2 billion for the 2001 fiscal year, which ended Sept. 30.

"We always believed Lucent would rise from the ashes, and Russo's appointment will help speed that process along," says John Gonsalves, a VP at communications-strategy consulting company Adventis Corp. Russo's strong points, says Gonsalves, are her background with Lucent and the telecommunications industry, the fact that she's proven her ability to work well with Schacht during the transition, and her familiarity with and ability to carry through on Schacht's planned restructuring.

Lucent recently revealed in a Securities and Exchange Commission filing that, because of its poor showing in 2001, it wouldn't award bonuses to Schacht and four other top executives.

The makeover begun under Schacht calls for the company to cut its work force by half, from a high of about 120,000 to about 60,000. Lucent also has shed some of its peripheral operations and is focusing on its main business: selling heavy-duty switches, routers, and other telecommunications gear to large phone companies and Internet service providers. On Monday, Schacht said he expects Lucent to return to profitability sometime in 2002, but didn't offer any more specifics.

Schacht, who was Lucent's first CEO, was brought back after the company's board forced out previous CEO Richard McGinn in late 2000 as the vendor's revenue and stock price plummeted.