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Tough Month Ahead for AlcaLu's Russo

Alcatel-Lucent (NYSE: ALU) saw its share price rise by nearly 5 percent Friday following media reports that CEO Pat Russo has been given a month to come up with a new corporate plan that will turn the vendor's fortunes around.

Light Reading has received confirmation that the vendor held an Extraordinary Board Meeting a week ago (Friday, September 21) to discuss the company's plans following a series of profit warnings and disappointing financial presentations. (See AlcaLu Cuts 2007 Outlook by $1.25B, AlcaLu's Russo: We're Under Attack!, Alcatel-Lucent Slumps on Q2 Loss , Merger Tears Into AlcaLu's Sales, and AlcaLu Breaks Down (in) 2006.)

Russo stated on September 13, when AlcaLu announced it was cutting its revenues forecast for the full year, that further restructuring measures would be taken into account for ongoing market pressures, and that those new measures would be announced when the vendor next holds a quarterly earnings call on October 31.

Now the Financial Times reports that Russo has been asked to present a new strategy to the company's board on October 30, including plans for greater restructuring of staff and product lines.

In addition, French newspaper Les Echos this morning reported talk among financial analysts that Russo may resign.

The FT, though, reported that Russo's position as CEO is not under any immediate threat.

The reports sent Alcatel-Lucent's share price up nearly 5.4 percent Friday to €7.27 on the Paris stock exchange. The company has seen its share price fall by more than 28 percent since it opened its doors on December 1, 2006, when its stock stood at €10.12.

On the NYSE this morning, AlcaLu's share price was up $0.44 (4.51%) to $10.19 in midmorning trading.

AlcaLu declined to comment on the speculation surrounding Russo's continued role as CEO, but a spokesman confirmed the company "has been looking at ways to accelerate those plans in light of the September 13 announcement. As would be expected management reviews its plans with the Board. The company takes seriously the need to improve the financial performance of the business and is taking the necessary steps."

No further details about those steps are being articulated at present.

Just how long Russo will remain as CEO is certainly a topic of much discussion among industry executives. At an industry event in Geneva this week a number of executives, who responded to questions about Russo's role under conditions of anonymity, suggested that AlcaLu would likely have a new CEO by this time next year. But none believed Russo would resign or be sacked in the near term.

And one person close to AlcaLu dismissed the idea that Alcatel's former COO Mike Quigley might return as CEO at some point, even though such a move would likely be seen as a positive by many AlcaLu staff. "Once you've left [AlcaLu] you're never coming back," suggested the executive.

AlcaLu announced the departure of Quigley and of the vendor's chief administrative officer Frank D'Amelio last month. (See Quigley, D'Amelio out at AlcaLu.)

— Ray Le Maistre, International News Editor, Light Reading

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deauxfaux 12/5/2012 | 3:01:49 PM
re: Tough Month Ahead for AlcaLu's Russo If the reports are true, it is extraordinary for a board traditionally full of "old boys," golf buddies and hacks such as AlcaLu's to demand much of anything, other than better pastries at the next board meeting.

I don't know whether Jack Welch could do anything with this sprawling bureaucratic nightmare
Stevery 12/5/2012 | 3:01:49 PM
re: Tough Month Ahead for AlcaLu's Russo
http://tinyurl.com/yqejkh

Per Lindberg, an analyst with Dresdner Kleinwort, on Thursday called for Alcatel-Lucent to replace Russo with Mike Quigley, the company's former chief operating officer, who quit last month. The analyst also estimated the company needs to pare 30,000 jobs, and not the 12,500 being targeted.
His verdict on the merger is harsh.
"There is little doubt that the merger between Alcatel and Lucent has turned into a veritable fiasco," he said.



30K jobs? Wasn't that the size of LU before the merger?

In any case, here is Stevery's Excellent Restructuring Plan for LU:

Call up Mike Z, offer the LU part of ALU for the princely sum of a three-star Michelin meal in Paris. With excellent wine. Slip something into the wine, make him wake up with his signature-in-blood on the deal.

He'll never know what hit him.
net-hed 12/5/2012 | 3:01:49 PM
re: Tough Month Ahead for AlcaLu's Russo
What made it an 'extraordinary' board meeting, exactly? And how did Light Reading 'confirm' that it was 'extraordinary'?

I guess if you use vague enough terms, you can goose the drama in a story without technically being innaccurate, right? Well done. I keep some popcorn near my PC for these occasions.
Lite Rock 12/5/2012 | 3:01:48 PM
re: Tough Month Ahead for AlcaLu's Russo This is all still Krish's fault you know...

There are some great people working at AlcaLu even though the corporate culture of both DSC and LU along with some crappy products have poisoned an otherwise fine wine.

But on a positive note, the wife is out of town this weekend!

Cheers
alandal 12/5/2012 | 3:01:48 PM
re: Tough Month Ahead for AlcaLu's Russo "Once you've left [AlcaLu] you're never coming back," suggested the executive.???

Which part of AlcaLu does this apply? Did Rossu go back to Lucent before?
paolo.franzoi 12/5/2012 | 3:01:48 PM
re: Tough Month Ahead for AlcaLu's Russo
Extraordinary Board meetings are board meetings that occur off the "ordinary schedule". Most public company boards meet once per quarter. A second meeting in a quarter, for whatever reason, would be considered extraordinary. Literally - outside the ordinary.

seven
net-hed 12/5/2012 | 3:01:47 PM
re: Tough Month Ahead for AlcaLu's Russo >Extraordinary Board meetings are board meetings that occur off the "ordinary schedule".

Ah. OK. Sorry, LR. I take back my earlier post.
MorningWd 12/5/2012 | 3:01:47 PM
re: Tough Month Ahead for AlcaLu's Russo As it has been pointed out before, Mr. Cramer was Real with the Money prediction

http://www.youtube.com/watch?v...
Lite Rock 12/5/2012 | 3:01:47 PM
re: Tough Month Ahead for AlcaLu's Russo Quigly left and many people think he ought to come back.

gocowboys 12/5/2012 | 3:01:46 PM
re: Tough Month Ahead for AlcaLu's Russo How motivated would you be if you were Mike to return? He was the heir apparent behind Serge and discarded for Russo and the ill fated merger.
If that were not insulting enough, now the view is that he should come back and clean up the mess. I doubt it!

Many folks saw the issues with this merger before it happened. If you are healthy and spend time with diseased patients, you get sick...they do not get healthy for the association.

In terms of the layoffs, lets hope that Pat and her minions are the first to go. Else, hope fades quickly.

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