Alcatel-Lucent boss leaving as losses mount

Feb 07, 2013 by Greg Keller

Alcatel-Lucent CEO Ben Verwaayen is leaving the loss-making French-U.S. telecommunications gear maker after a failed four-year bid to turn the business around.

Verwaayen said in a statement Thursday that it was "clear to me that now is an appropriate moment" for -Lucent to seek new leadership. Investors cheered the news, with shares jumping 7.7 percent in early trading to €1.40.

The Dutchman's surprise departure comes as Alcatel-Lucent reported losing €1.37 billion ($1.85 billion) last year, compared with a €1.1 billion gain a year earlier.

No details on Verwaayen's replacement were provided. He has agreed to stay on as until a successor can be found. Alcatel-Lucent said it will look at candidates both internally and from outside the company.

Verwaayen joined Alcatel-Lucent in 2008 after the ouster of the previous management led by American Patricia Russo. Russo and her French counterpart Serge Tchuruk had masterminded the $11.6 billion merger of Lucent of the U.S. and Alcatel of France. The combined company has racked up many billions of euros in losses since its creation in 2006, something Verwaayen has spent four years trying to reverse.

Alcatel-Lucent supplies and corporations the technology for building global communications networks. It has suffered from repeated rounds of costly and restructuring, as well as intense competition from the likes of Ericsson of Sweden, China's Huawei and , a Finnish-German .

The Franco-American company is in the middle of a €1.25 billion restructuring program aimed at cutting 5,500 jobs, ending unprofitable contracts and leaving or reorganizing operations in poor markets.

Verwaayen said Thursday the company has "seen progress" on the plan announced last July, and pointed to growth in its order book as a sign of customer confidence.

Alcatel-Lucent had aimed to raise its profitabilty from the 3.9 percent adjusted achieved in 2011, but abandoned that target halfway through the year. It finished 2012 with an adjusted operating margin of only 2.9 percent.

Last year's earnings were hit by a further €1.4 billion charge as Alcatel-Lucent continued to account for the falling value of past acquisitions and its own fixed assets.

Verwaayen was lauded on arrival in October 2008 after for transforming BT Group from a troubled, loss-making phone operator into a profitable and aggressive leader in broadband Internet access. But Alcatel-Lucent proved to be a tougher challenge than expected. Sales slid 5.7 percent last year to €14.4 billion and the group continued to burn cash, recording a seventh-consecutive year of negative cash flow.

Whoever steps in to replace Verwaayen will have to uncover a fresh path to profitability, after seven years of restructuring failed to achieve goals set out at the company's creation.

The tie-up was designed to boost margins through cost and research and development savings, while improving the joint company's pricing power with telecom operators, its largest customers.

The combination was seen as creating the critical mass needed to compete with the likes of China's Technologies Co. and Ericsson AB of Sweden.

But intense competition in the telecoms industry has meant many of the savings have been used on discounts passed to customers, and analysts said Alcatel- has not coped as well as some of its competitors.

Explore further: Hand out money with my mobile? I think I'm ready

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Alcatel-Lucent loss narrows in 1st quarter

May 06, 2011

(AP) -- Alcatel-Lucent SA said Friday its net loss narrowed sharply in the first quarter compared with a year earlier, when a components shortage caused the telecommunications gear maker's losses to balloon.

Alcatel-Lucent announces Internet contract in China

Jul 21, 2010

French-US telecom equipment maker Alcatel-Lucent said on Wednesday it had been chosen by mobile operators China Mobile and China Telecom to install a fiber optic network in China enabling high-speed Internet ...

Verdict spares Microsoft $358M in patent damages

Sep 11, 2009

(AP) -- A federal appeals court said Friday that Microsoft Corp. does not have to pay Alcatel-Lucent $358 million for patent infringement because of problems with how the damages were calculated.

AT&T picks Alcatel-Lucent, Ericsson for network

Feb 10, 2010

(AP) -- AT&T says it has picked Alcatel-Lucent and Ericsson to supply the equipment for its next wireless network, which will provide faster data speeds starting next year.

Ericsson posts Q4 loss, but sales up

Jan 31, 2013

Wireless equipment maker Ericsson posted a 6.46 billion kronor ($1.02 billion) loss in the fourth quarter due to a massive one-time charge, but said Thursday its sales rose 5 percent as mobile operators invested in broadband ...

Recommended for you

Hand out money with my mobile? I think I'm ready

Apr 17, 2014

A service is soon to launch in the UK that will enable us to transfer money to other people using just their name and mobile number. Paym is being hailed as a revolution in banking because you can pay peopl ...

Quantenna promises 10-gigabit Wi-Fi by next year

Apr 16, 2014

(Phys.org) —Quantenna Communications has announced that it has plans for releasing a chipset that will be capable of delivering 10Gbps WiFi to/from routers, bridges and computers by sometime next year. ...

Tech giants look to skies to spread Internet

Apr 16, 2014

The shortest path to the Internet for some remote corners of the world may be through the skies. That is the message from US tech giants seeking to spread the online gospel to hard-to-reach regions.

Wireless industry makes anti-theft commitment

Apr 16, 2014

A trade group for wireless providers said Tuesday that the biggest mobile device manufacturers and carriers will soon put anti-theft tools on the gadgets to try to deter rampant smartphone theft.

Dish Network denies wrongdoing in $2M settlement

Apr 15, 2014

The state attorney general's office says Dish Network Corp. will reimburse Washington state customers about $2 million for what it calls a deceptive surcharge, but the satellite TV provider denies any wrongdoing.

Netflix's Comcast deal improves quality of video

Apr 14, 2014

Netflix's videos are streaming through Comcast's Internet service at their highest speeds in the past 17 months now that Netflix is paying for a more direct connection to Comcast's network.

User comments : 0

More news stories

Ex-Apple chief plans mobile phone for India

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

A homemade solar lamp for developing countries

(Phys.org) —The solar lamp developed by the start-up LEDsafari is a more effective, safer, and less expensive form of illumination than the traditional oil lamp currently used by more than one billion people ...

NASA's space station Robonaut finally getting legs

Robonaut, the first out-of-this-world humanoid, is finally getting its space legs. For three years, Robonaut has had to manage from the waist up. This new pair of legs means the experimental robot—now stuck ...