Lucent CFO Quits, World Yawns
After a series of high-profile management shakeups, reorganizations, and financial shortfalls (see Lucent Warns -- Again, Lucent Shares Hammered by $125M Goofand Lucent Loses $1 Billion, Plans Big Layoff), it takes a lot to shock Lucent watchers these days. While analysts weren’t exactly expecting Hopkins to quit, some say it was only a matter of time before she left.
“When a CFO quits, the stock usually goes down about 15 to 20 percent,” says Steve Kamman, an analyst with CIBC World Markets. “I’d say this was a pretty muted response.”
Frank D'Amelio, who had been vice president of Lucent’s Switching Solutions Group, will take over for Hopkins as CFO (see Lucent Shuffles More Execs).
Hopkins had been hired last year by the former CEO, Richard McGinn, who was ousted by Lucent’s board of directors in October 2000 (see McGinn: McGone). With McGinn gone, Hopkins’s prospects for moving up the corporate ladder were limited, say analysts. And since she had been there just over a year, long enough to earn her signing bonus, this could have seemed like a good time to call it quits, speculates Kamman.
But the real issue might have more to do with Lucent’s plan going forward. After McGinn left in October, Henry Schacht took over as CEO. Despite Lucent’s claims that Schacht is not an “interim” CEO, Schacht himself has publicly stated his desire to retire and has said that he is already looking for a successor. Perhaps Hopkins didn't have the desire to shepherd the company through a painful restructuring while waiting to hear who the next management team would be.
For more than a year Lucent has struggled to turn around its business. The company, which is now valued at a market capitalization of $35.6 billion, has lost about $80 billion of its value in a little over a year’s time. It is in the midst of a massive restructuring plan that company executives hope will turn the tide. But establishing a permanent leadership team is still key to defining its future, say analysts.
Hopkins came to Lucent in April 2000, just a few months after the company had issued the first of a series of disastrous earnings warnings. Since she began, she has been active in formulating the company’s restructuring plan, which has included a stricter financing program for its customers (see Winstar Sues, Lucent Scoffs). Always the optimist, she has said she believes that Lucent is a "pile of gold" just waiting to be tapped.
Overall, Kamman is optimistic about Lucent’s prospects. “Usually when a CFO resigns you look for things to fall apart,” he says. “But I think it would be hard for the situation to get much worse.”
-- Marguerite Reardon, Senior Editor, Light Reading