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Optical/IP

Lucent & Alcatel: Quigley or Russo?

Early reports on the merger talks between Alcatel (NYSE: ALA; Paris: CGEP:PA) and Lucent Technologies Inc. (NYSE: LU) put the latter's CEO, Pat Russo, as the leading contender to take the helm should the "merger of equals," as the companies have called it, come off. (See Lucent, Alcatel Rekindle the Flame.)

But that would be a major blow to Alcatel's CEO-in-waiting, Mike Quigley, who has been recommended by the French giant's current leader, Serge Tchuruk, as his successor.

Tchuruk is due to step down as CEO in June, with Quigley having earned his stripes and worked his way up to president and chief operating officer (COO) on the back of his strong performance as the head of Alcatel's business in North America. (See Alcatel Gets Quigley With It.)

Quigley's coup was to land a massive role as the lead integrator and main equipment supplier for Project Lightspeed at SBC, now part of AT&T Inc. (NYSE: T). He has also been the driving force behind Alcatel's dominance in the DSL equipment market. (See Mais Alors! Alcatel Bags $1.7B SBC Deal , Alcatel Hits 80M DSL Lines , and Infonetics: DSL Aggregation Growing.)

And thanks to its partnership with Microsoft Corp. (Nasdaq: MSFT), Alcatel has also left Lucent trailing in the North American IPTV sector. (See BellSouth's Smith Details IPTV Plans, Verizon Makes Microsoft Video King, SBC Awards Microsoft $400M IPTV Deal , and Is Microsoft Finally Carrier Grade?.)

But with next-generation architectures and fixed/mobile convergence such hot topics, Lucent has made significant inroads with many of those major vendors with its IP Multimedia Subsytem (IMS) offering. (See Lucent Lands BellSouth IMS Deal, SBC Jumps on Lucent IMS Bandwagon, Cingular Picks Lucent for IMS, and Lucent in the Lead for Verizon IMS?.)

Some in the industry believe Alcatel got bogged down in the Lightspeed project and let Lucent slip under the radar and grab back some of the limelight, a situation that some Alcatel insiders say caused tension between Tchuruk and Quigley. That, plus Russo's experience as a CEO -- she took the helm in early 2002 and has clung on to power since -- could give her the edge. (See Lucent's Next Leader.)

But there will be plenty of arguments against making Russo the CEO of a combined Alcatel/Lucent, given that the U.S. company has shrunk dramatically, has pension concerns, and recently cut its 2006 outlook. (See Lucent Cuts 2006 Outlook and Pension Concerns Hit Lucent.)

Alcatel, meanwhile, looks healthy by comparison. (See Alcatel Pays Up.)

Then there's culture and politics to consider. Is a French company that is larger and currently more successful than its potential U.S. partner going to hand over the reins?

Neither company is commenting any further, and even the normal gossip lines appear to be closed off.

Alcatel's share price is up €0.28, more than 2 percent, to €13.13 (US$15.77) on the Paris exchange this morning, while Lucent's stock edged down slightly, by 2 cents to $2.80, in after-hours trading in New York.

Which leaves the question of what a new combined Alcatel and Lucent might be called. With Russo at the helm, it could be Lucatel, though that sounds more like a medicine for sore throats than a major vendor. With Quigley in charge, Alcacent could be an option, though sounding like a carbonated drink would stand against it.

— Ray Le Maistre, International News Editor, Light Reading

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digits 12/5/2012 | 4:00:24 AM
re: Lucent & Alcatel: Quigley or Russo? All depending on wheteher anything actually comes of the talks, of course.
Should pen meet paper, though, it looks like it might be one might struggle for the top seat...
gurb 12/5/2012 | 4:00:23 AM
re: Lucent & Alcatel: Quigley or Russo? Well, judging by the relative market value of the two companies that should be a no-brainer. I may be completely wrong (weirder things have happened in the M&A arena) but I can't see how this potential merger can be interpreted in any way other than a Lucent acquisition by Alcatel.

I would point out that the rumors around the 2001 talks also called the deal a 'merger', but when it came down to who was at the helm of the merged company it quickly became clear that wasn't the case and it all came apart.
digits 12/5/2012 | 4:00:23 AM
re: Lucent & Alcatel: Quigley or Russo? It's up 25 cents, 9 percent, to $3.07 in pre-market trading.

On NYSE, Alcatel is up 49 cents, more than 3 percent, to $15.94 in pre-market trading.
optodoofus 12/5/2012 | 4:00:23 AM
re: Lucent & Alcatel: Quigley or Russo? Quigley is hands-down the better choice.
Stevery 12/5/2012 | 4:00:22 AM
re: Lucent & Alcatel: Quigley or Russo? Russo vs Quiqley:

One of my favorite things to do is try some test sentences:

1. Pat should be CEO of the combined entity because of her financial management of the pension obligations. The pensions account for 80% (?) of LU profits.

2. Pat should be CEO of the combined entity because of her stunningly successful navigation of the LU product line.

3. Pat should be CEO of the combined entity because she has demonstrated great leadership of a company which is only 1/3 the size of the proposed entity.

OK, I'll stop now.

BTW, I propose merging my startup with GE. I will naturally assume the CEO position of the combined entity.
fantomas 12/5/2012 | 4:00:21 AM
re: Lucent & Alcatel: Quigley or Russo? You guys are all dreaming!

This is an Alcatel acquisition, nothing else!

The French are spending money to put an American in charge! LOL

Say goodbye to Russo and say goodbye to most of the US based employees!

futureisbright 12/5/2012 | 4:00:19 AM
re: Lucent & Alcatel: Quigley or Russo? she'll laugh all the way to the bank
muffinman 12/5/2012 | 4:00:19 AM
re: Lucent & Alcatel: Quigley or Russo? I'll take "c", the combined board will ask Serge Tchuruk to stay on board for 2 years to complete the integration/firings.

mm
minimeca 12/5/2012 | 4:00:18 AM
re: Lucent & Alcatel: Quigley or Russo? What do you do if the one you want says he's not ready, and the other choice, isn't the one you want?

paolo.franzoi 12/5/2012 | 4:00:17 AM
re: Lucent & Alcatel: Quigley or Russo?
mini,

Alcatel is actually still in wireline networking in the US. Lucent is not.

The Lucent wireless group would stay, I would expect every wireline employee to be nuked.

seven
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