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Optical/IP

Lucent CFO Quits, World Yawns

After the resignation of Lucent Technologies Inc. (NYSE: LU) CFO Deborah Hopkins, the market issued a collective shrug (see Lucent CFO Quits). Lucent stock closed at $10.46 today, off 6.19 percent.

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
http://www.lightreading.com

flanker 12/4/2012 | 8:27:53 PM
re: Lucent CFO Quits, World Yawns And if only 360 would fire their CFO...
Belzebutt 12/4/2012 | 8:27:52 PM
re: Lucent CFO Quits, World Yawns Bad CFO? It seems like no good CFO wants to work at Lucent, and the bad ones quit...
rafaelg 12/4/2012 | 8:27:51 PM
re: Lucent CFO Quits, World Yawns OPTINUTS,

Not that I am a fan of Lucent or DH, but most of Lucent's woes were there already. If you follow her history, she was looking for more power. That's is not so bad when you are a well grommed brainwashed ATT manager. But if you are an agressive "new" manager with new ideas,shaking the establishment and getting rid of cobwebs, Lu doen't like it;specially if you are a female. Eventually all of the Ricky show will end...
optinuts 12/4/2012 | 8:27:51 PM
re: Lucent CFO Quits, World Yawns i always thought that DH had too much influence for someone that didn't understand the business or the culture of the company. certainly, since she joined, the stock has lost a lot of value and the bad news is still coming, where's the financial discipline.

i think the new cfo will do better.
rafaelg 12/4/2012 | 8:27:50 PM
re: Lucent CFO Quits, World Yawns http://www.fortune.com/indexw....


enjoy...
tycon03 12/4/2012 | 8:27:47 PM
re: Lucent CFO Quits, World Yawns Does Hopkins leaving come as any surprise?? Right after she's eligible for her multi-million dollar bonus. She stayed at Boeing for an astounding sixteen months, I'm wonndering how long she was at GE & Unisys. Long enough to collect a bonus of some sort I'm sure. I understand she walked into a pressure cooker at Lu, but Debbie that is why you get paid millions. How can a person like that bounce from job to job earning a mind-blowing salary and then bailing out?? I guess having contacts like McGinn explains something. Although the new CFO is a ATT "good old boy" I think he will do a fine job. One thing he seems to have is loyalty, something Debbie knows nothing about. Lu's troubles certainaly were not a result of Debbie's actions or reactions, but I think they wasted time and money bringing her on board. Hopefully them and others will learn from this costly mistake. Lu will be the telecom Phoenix and rise from the ashes, it's just a matter of when not if. A year and a half ago a telecom analyst told me if Lu goes down the whole industry will follow, I laughed at him then, but he was right. Now he's predicting a return to the top. No telecom stocks will ever reach the heights of 1999-2000, but there will be a rebound within the next 8-12 months.
hitechguy 12/4/2012 | 8:27:35 PM
re: Lucent CFO Quits, World Yawns If LU is going to rise, tell me what products
will sell enough to do it?

* Voice: 5ESS not evolving as quickly as it
needs to. Not taking advantage of VoIP.
* Optical: Losing to Nortel, Ciena.
* IP: Little market acceptance.
* FR/ATM: All old products.
* Wireless: Don't know.

LU does have a few gems here and there. But
without strength in the big revenue generators
of voice or optical, it just does not matter
much.

hitechguy
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