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Russo, Tchuruk Out at Alcatel-Lucent

Ray Le Maistre
7/29/2008

The two executives who drove through the merger of Alcatel and Lucent, Serge Tchuruk and Pat Russo, have announced their departures as, respectively, chairman and CEO of Alcatel-Lucent (NYSE: ALU).

The company also announced it will restructure its board of directors, reducing the number of members from the current 14 over an unspecified period of time. (See Russo, Tchuruk to Leave AlcaLu.)

The news comes only days after the subject of Russo's succession had been raised again following the departure from AlcaLu of prime internal candidate, Frédéric Rose. (See Plot Thickens at AlcaLu and Thomson Nabs AlcaLu Exec for CEO Role.)

The writing has been on the wall for Russo for some time, with reports suggesting that AlcaLu's board had initiated the process of finding a new CEO earlier this year. Former BT boss Ben Verwaayen is still regarded by many as the prime external candidate. (See Is AlcaLu Seeking a New CEO?, AlcaLu Investors Vote for Change, AlcaLu Seeks CEO Dismissal Rule Change, and Verwaayen Set to Leave BT.)

Russo is staying on until a new CEO is found, but her tenure won't last beyond the end of 2008, the company announced.

The giant vendor has struggled since its formation in late 2006, having posted six straight quarters of net losses and seeing its share price tumble more than 60 percent from €10.12 (US$15.90) on December 1, 2006, its first day of operations, to below €4.00 ($6.28). (See AlcaLu Posts Loss, Warns on Full Year, AlcaLu Reports Q4 Loss of €2.6B, AlcaLu Revamps Its Carrier Business, Russo Shakes Up AlcaLu's Top Team, and AlcaLu Board Backs Russo.)

Today's news, coupled with today's in-line second-quarter numbers, gave the stock a 4.2 percent lift to €3.99. (See AlcaLu's Q2 Dragged Down by CDMA.)

In a prepared statement, Russo said: "I believe it is the right time for me to step down. The company will benefit from new leadership aligned with a newly composed Board to bring a fresh and independent perspective that will take Alcatel-Lucent to its next level of growth and development in a rapidly changing global market."

Creating AlcaLu had been a long-time goal for former Alcatel CEO Serge "The Merge" Tchuruk before he finally realized his dream, in the face of some shareholder opposition, in 2006 with willing partner Russo. (See Alcatel-Lucent Stays Tight-Lipped, Farewell, Lucent, Alcatel Lucent Merger Under Fire, and Alcatel, Lucent Seal Deal.)

In the vendor's official announcement, Tchuruk stated: "I am proud that Alcatel-Lucent has become a world leader in a technology which is transforming our society. It is now time that the company acquires a personality of its own, independent from its two predecessors. The Board must also evolve and the Chairman should give the first example, which I have decided to do."

Tchuruk steps down on October 1. A new non-executive chairman is being sought.

As part of the board restructuring, former Lucent CEO Henry Schacht is resigning with immediate effect.

— Ray Le Maistre, International News Editor, Light Reading

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Stevery
Stevery
12/5/2012 | 3:35:46 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
Who would have guessed that the exit would have occurred so soon? Those boy and girls on the Alcalu board suure are fast-acting.


But seriously: I note that they announced the exit without having an obvious successor, which tells us that there is STILL nobody who wants to put "Alcalu CEO" on their resume.

gocowboys
gocowboys
12/5/2012 | 3:35:45 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
Hmmm...Pat Russo gets $9M to leave the company after doing SUCH A GOOD JOB. Where do you go to get a sweet deal like that?

By my calculations, the combined company has lost about $13B in market cap, pushed out the best/brightest and completely abdicated the market. Time to party!

This is a complete travesty...good riddance to Serge and Pat.
Stevery
Stevery
12/5/2012 | 3:35:45 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
Time to hit the Presidential trail ........

Bite your tongue. (Or typing fingers in your case.)
dodo
dodo
12/5/2012 | 3:35:45 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
the old algorithm for success hasn't been working. Time to hit the Presidential trail ........
NeuronHammer
NeuronHammer
12/5/2012 | 3:35:44 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
> Hmmm...Pat Russo gets $9M to leave the company
> after doing SUCH A GOOD JOB. Where do you go to
> get a sweet deal like that?

No idea, hahaha... and looking on these disastrous voluntary leaving programs that happened in Europe in 2007/2008 where people got ripped off so badly by shitheaded management-douchebags when they wanted to leave the remains of this company voluntarily by taking a small amount of money - less than 1% of the upper sum. It is insane.

> By my calculations, the combined company has
> lost about $13B in market cap, pushed out the
> best/brightest and completely abdicated the
> market. Time to party!

Alu has also lost creativity:
* by the thousand good engineers that left on their own
* that got fired
* or which are still in the company but without not even a dim of motivation any longer. Just waiting for the next voluntary-program for leaving the company.
* brainless managers down to the lowest level which will do whatever task they get, be it even a complete idiot job/task in order to stay some more time in order to keep their well-payed job. A new job will never be as good paid as now, especially with ALU written in the resume.

Alu has lost good products:
* good-selling products were set to "aggressivly ramped down"-status or "not for new customers/contracts" and didn't get the planned facelifts in order to higher margins again
* planned and already in development phase staged products - and I admit really good upcoming ones like UPM - were scrapped and absolutely sick decisions were taken regarding future roadmap products by absolutely incompetent idiots.
* Sites were closed down or outsourced, however, their products were transfered to other sites which didn't have enough to work, or which developed products that did not sell. Imagine: You are developing a monster that no one will ever buy directly for that trash, an other site develops two products that sell through the roof. Which site would YOU close when you have to close one out of the two ? And now imagine what ALU did... exactly... mass confusion guaranteed, and mass delay.

* and now they are loosing CEO and chairman. These two should vote for 100 slaves to follow them, just like the old Egyptians did. Then the real troublemakers would have to leave as well (I don't mention any names any more, there are too much that burnt millions and billions of money).
bollocks187
bollocks187
12/5/2012 | 3:35:42 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
This would be worse distastor - slash and burn.

Hiring an operator to run a vendor is not a tried and tested way. They need to first hire a competent COO reporting to the BoD. Then hire a CEO with leadership drive and street savvy - not one with a fast buck mentality.

Most importantly lock the compensation to a 10 year business cylce not with the biggets payout in 10 years - not the way they are doing it today it is crazy Pat gets $x Million for doing a crappy crappy job and she knows it. The next one in that positon should be more focused on growing a compnay nad creatign a scuccesful legacy - short term results do not guarantee long term success but if you plant the correct seeds and do good by the company/employees/investors then you should make choices that will become clear in the medium to long term and you will be reward.

gocowboys
gocowboys
12/5/2012 | 3:35:41 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
The problem is that no top tier CEO wants the position. This is a sinking ship and everyone wants someone else to bale water to see if she can float. Once the boat is back on plane, a big ticket CEO will step in to try to create growth. Quigley would have been the right choice to handle this thing...but he is probably much happier in the sun in Australia these days.

Bottom line...the merger was ill conceived (thought so back then)...does everyone remember Serge indicating that Lucent was worth the purchase price when he was pushed? Lucent was a horror show then and it contaminated a profitable albeit political company.

Serge will be remembered for his mindless bravado and Pat for her utter incompetence...I can hardly wait until Cramer gets a hold of all this tonight. He might have to take Pat off the wall of shame. Of course, there has to be another mindless board willing to hire her.

<flame off=""></flame>
FbytF
FbytF
12/5/2012 | 3:35:40 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
FYI Ben Verwayeen former BT CEO came from the former Lucent so the argument that an operator can't run a vendor isn't valid.
jepovic
jepovic
12/5/2012 | 3:35:38 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
From one perspective, Russo is a disaster of course. However, she did manage to offload LU at a terribly inflated price. The CDMA business is now officially dead. A stand-alone LU would be worthless by now.

Plus, she did managed to make a few bucks for herself. Let's not kid ourselves, her task was a mission impossible anyway.
jepovic
jepovic
12/5/2012 | 3:35:38 PM
re: Russo, Tchuruk Out at Alcatel-Lucent
From one perspective, Russo is a disaster of course. However, she did manage to offload LU at a terribly inflated price. The CDMA business is now officially dead. A stand-alone LU would be worthless by now.

Plus, she did managed to make a few bucks for herself. Let's not kid ourselves, her task was a mission impossible anyway.
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