Just over a year ago, the name plate on the Alcatel-Lucent CEO office got a refresh, as Michel Combes became the first French national to take the helm at the Franco-American vendor. (His predecessors, of course, were Dutch and American -- Ben Verwaayen and Pat Russo, respectively.)
Combes moved in on April 1, 2013, and quickly stamped his authority on the company, initiating his Shift Plan (a fancy name for a restructuring process) and doing all he could to make sure the company didn't follow Nortel to the vendor scrap yard. (See Alcatel-Lucent Unveils Shift Plan and Alcatel-Lucent Builds Future Around IP.)
Since then, Alcatel-Lucent (NYSE: ALU)'s share price has tripled, from a shocking $1.32 on the day he took over to $4.02 today. That's still not great -- the company's market capitalization is still only US$11 billion. And when Alcatel-Lucent was formed in late 2006 the stock was trading above $14.00.
The CEO says he had a number of things to address. The company was "trying to do too many things," Combes told Light Reading recently. "We had lost our competitiveness, and we had a broken balance sheet. But we have innovation, which we are reigniting, and a clear vision, and we have fixed the balance sheet. We are starting to reshape." (See Alcatel-Lucent Shifts Up a Gear to End 2013 and AlcaLu Breathes New Life Into Bell Labs.)
That stock might move again tomorrow (May 9) once the company's first-quarter financials have been unveiled.
Whatever those numbers show, Combes will, of course, tell everyone that the company has a bright future as the world becomes ever more connected. The reason he may be right, of course, is that the bedrock of Alcatel-Lucent these days, and the fulcrum of Combes's Shift Plan, is the vendor's IP division, which has long been the company's shining star. And that's just as well, as the future of communications and information networks is IP -- at least for the foreseeable future. (See TiMetra at Heart of AlcaLu's Shift.)
The CEO has plenty of convincing to do, though, especially as questions still arise about AlcaLu's future portfolio. Does it have what it takes to make a viable business from mobile broadband access, in the face of intense competition from Ericsson AB (Nasdaq: ERIC) and a rejuvenated Nokia Corp. (NYSE: NOK)? (See Nokia Ushers In New Era, Retires NSN Name and Nokia, Juniper Team To Target Telco Cloud.)
Combes is adamant that radio access is part of the company's future. The CEO reiterated that "ultra-broadband access -- all types of fixed and mobile, from 4G, small cells, 5G," plays a critical role in the roadmap of the company. "We have absolute dedication and commitment to our own mobile broadband. The future is an IP router with a small antenna. 5G will be a small-cell-based architecture and will have to be context-aware -- that's a big challenge."
Combes is also excited about many other emerging technologies and markets. He sees massive potential in the connected car sector -- and he's clearly a fan of the four-wheeled world in general, as he names his favorite movie as Rush, the biopic of 1970s Formula 1 driver James Hunt. And he's bullish about AlcaLu's role in the shift towards virtualization in telecom networks.
"The cloud and NFV -- we are investing a lot in that space. It's the convergence of networks and IT," notes Combes, before adding that the company's SDN unit, Nuage Networks , is already well advanced in what he calls the "first stage of SDN," in the data center. The second stage is the software-defined VPN, and the third step is the virtualization of "the [enterprise] campus… There will be much less hardware on the customer premises."
He adds: "One of the biggest surprises I had when I joined was finding Nuage and CloudBand. That was a very nice surprise." (See How Alcatel-Lucent Set a Telco Cloud Example .)
The upheaval that the cloud and virtualization will bring will result in a "substantial transformation of the way networks will be managed -- they will need a distributed cloud."
And, naturally, Combes is confident his company can deliver what's needed for that. But can it deliver it alone? Will the upheaval force the vendor community into further consolidation? There is constant speculation that Alcatel-Lucent might join forces with the Networks business of Nokia (which was until very recently NSN). (See Eurobites: Alcatel-Lucent's Shares Rise on Nokia Bid Rumor.)
"I don't think consolidation is inevitable. The Shift Plan has reconnected us with cash generation, and we are now in control of our own destiny," Combes says. "That doesn't mean it won't happen, but our focus now is on our own future and building strong partnerships, like the ones we have with Qualcomm and Intel. Those are very powerful." (See Joint Qualcomm & AlcaLu Small Cells Due Mid-Year and Alcatel-Lucent announces global collaboration with Intel to speed industry move to cloud.)
For the time being, Combes is faced with squaring up to his main rivals -- Ericsson, Cisco Systems Inc. (Nasdaq: CSCO), and Huawei, he believes -- to win new business and further improve the company's fortunes. How well he's been doing lately, we'll see when the first-quarter numbers get published.
— Ray Le Maistre, , Editor-in-Chief, Light Reading