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W. David Gardner
July 29, 2008
2 Min Read
Alcatel-Lucent's chief executive Patricia Russo and chairman Serge Tchuruk were put on notice in May when the firm's shareholders voted to make it easier to dismiss them -- improve performance or else. The "or else" happened Tuesday and the two officers said they would step down as Alcatel-Lucent reported another quarterly loss.
Ever since the two companies -- Alcatel in France and Lucent Technologies in the U.S. -- cobbled together their "merger of equals" nearly two years ago, the company has been racked by massive layoffs, missed financial forecasts, falling revenues, and a stock price that is half what it was at the time of the merger. However, Alcatel-Lucent stock jumped 6% on the news of the management change in early trading Tuesday. "Our strategy is taking hold, and our results are demonstrating good operational progress," said Russo in a statement. "That said, I believe it is the right time for me to step down." Both Russo and Tchuruk will leave the company by the end of the year. In May, the company's shareholders authorized the firm's directors to make management changes by a simple majority rather than by a two-thirds majority vote. In its quarter ended June 30, Alcatel-Lucent reported a net loss of $1.73 billion. The company also cut its sales forecast for the next quarter. The company added that longtime director Henry Schacht, who previously had been CEO at Lucent, would resign immediately. Lucent, whose origins stemmed from Western Electric, the former AT&T manufacturing arm, has been struggling since the tech bubble burst in the late 1990s when the company was on an aggressive acquisition binge. Along with other firms supplying telecommunications infrastructure to service providers, Alcatel-Lucent missed virtually every quarterly financial forecast. The status of various company units that serve the defense market is suddenly open to increased scrutiny. Lucent's fabled Bell Labs, headquartered in New Jersey, produced a raft of important science and technology breakthroughs, including the development of the transistor. In wartime, Bell Labs produced many important defense and strategic services and products. Tchuruk had been an avid supporter of Thales, Alcatel's chief defense operation. Alcatel-Lucent will immediately look for successors for the two departing executives, who decided on their own to leave, the firm said. "It is now time that the company acquires a personality of its own, independent from its two predecessors," said Tchuruk.
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