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Employment

Headcount: Blood Transfusions

Hello, yeah, it's been a while. Not much. How 'bout you?

Yes, dear, Headcount is back and just in time to note some big heap changes at Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) and Alcatel-Lucent (NYSE: ALU).

First we take on Tellabs. What's going on there, anyway?

Krish Prabhu stepped down this week and didn't give a reason why. (See Prabhu Quits as Tellabs CEO .) Our sources say health may have been a contributing factor, as noted in the story. But piloting a tanker like Tellabs has got to be tough on anyone's ticker, so that can't be the only reason.

Headcount is sensing there are more reasons for Prabhu's parting.

"We believe Prabhu was a very good CEO who was simply dealt a bad hand, as Tellabs announced the acquisition of AFC just as he signed on as CEO," writes JP.MorganChase 's Ehud Gelblum in a note to clients today. "AFC, now TLAB’s Access business, saddled the company with negative gross margins from the beginning. Hence we attribute the blame for eroding gross margins (from mid-50s in 2004 to 32% in Q3'07) to the Directors and execs who preceded Prabhu."

Yep, that could be frustrating.

We're only guessing here, but it could be that Prabhu may not have had as much control at Tellabs as he would have liked. Note that he hardly made any new, big-time executive hires during his tenure. Just one or two, max.

Think of what usually happens when a CEO takes over. It's usually the opposite, right? Only one or two remain, the rest are replaced.

Looking at the Tellabs exec team in its current configuration, most of the execs were in place before Prabhu arrived. It's almost as if the company's chairman and founder, Michael J. Birck, never really let go of the steering wheel. Well, if he hasn't yet, he should.

Now let's switch our attention to AlcaLu.

We've already called for CEO Pat Russo's well-coifed head, on behalf of investors, for destroying shareholder value for the better part of the last year.

What's helped her standing with the board, no doubt, is that she couldn't possibly shoulder all the blame for all that was going on around her. It's not her fault the company is still so bloated and the industry pricing pressures are increasing by the day, is it?

The most recent restructuring will make a difference, if only because AlcaLu can now more acutely feel the market's punch as it has lost a few pounds of fat.

"More than ever, the ball is in CEO Russo's court, which also means that any future failures will be more clearly hers to bear," wrote Argus Research analyst Jim Kelleher, in a note to investors after the announcement.

Meanwhile, we have the same nit to pick at AlcaLu that we picked with Tellabs: Where's the new blood? Isn't the point of restructuring to, um, change the structure?

But what can an institution like AlcaLu possible glean from some scrawl on our humble Website? Headcount can almost hear Cindy Christy's sarcastic sighs as we type this.

While you ponder all that, cast your eyes on this fresh set of telecom industry appointments and disappointments over the past several days:

The AlcaLu Numbers Game
International editor Ray Le Maistre has done the math on AlcaLu so you don't have to. According to his abacus, there are 11,500 jobs still to be cut over the next two years.

The company had 82,000 heads on December 1, 2006. It announced a 12,500 reduction, then a new 4,000 reduction, which totals 16,500 jobs being cut. To date, only 5,000 jobs have gone, leaving 11,500 still to go by the end of 2009. As of September 30, 2007, Ray reckons AlcaLu has 78,850 staff – that includes subtracting the 5,000 and adding about 1,350 staff from managed services contracts and acquisitions.

Now for some Headcount math. If we have until the end of 2009 and we start counting on October 1 (since these AlcaLu figures come from the end of its third quarter), then AlcaLu looks to be getting rid of employees at a rate of about 14 a day, or 1 body every 102 minutes – even on holidays. Here's to the future...

Aloha, Ron
Ron Nelson, former president and CEO of Agility Communications (acquired by JDSU (Nasdaq: JDSU; Toronto: JDU) in 2005), sent this message along with a Plaxo update: "I'm heading for Hawaii for some R&R. Be back in a few months!" Nice work if you can get it. Ron lists himself as an entrepreneur-in-residence at Battery Ventures, but he has also hung out a shingle under the name of Agile Technology Advisors, where he is positioning himself as a turnaround specialist for underperforming businesses. No word on whether he has Pat Russo's phone number.

WooMe Gets BT VP
A new Web 2.0 venture, WooMe, propositioned us for coverage the other day and we declined. But we note that the company's CEO, Stephen Stokols, is a name we know. Stokols was BT Group plc (NYSE: BT; London: BTA)'s senior VP of strategy and business development when we last spoke to him. Here he is in a 2006 video talking about BT's venture into the realm of online portaldom.

The site Stokols was flogging at BT, BT Contact, has since launched. It's an interesting gimmick where BT, a big, fixed-line telco, will help anyone organize their digital address books, and it'll let them log-on to their Skype account to make free phone calls on the Internet.

Now Stokols is chasing two white hot trends – consumer-friendly video conferencing and speed-dating – with a Web site that invites participants to: "Meet 5 people in 5 minutes and decide who WOOs you!" The site's corporate blog also says that, in rare circumstances, WooMe might even save lives:
I don’t think we ever envisioned WooMe used to reduce violent deaths online, but one cannot overlook the fact that had this 17-year-old boy from northeastern China introduced himself on WooMe first, the violence could have been averted!


Good thing Stokols and his crew aren't pulling the whole insufferably cocky Web 2.0 startup act or anything.

Finally, before you get wooed away from this column, here's a summary of industry appointments and disappointments from the past few days:

That's all for now. But it doesn't have to be. Keep those news tips coming to [email protected].

— Phil Harvey, Managing Editor, Light Reading

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