Verwaayen Takes the Helm at AlcaLu

Former BT chief Ben Verwaayen is the new CEO of Alcatel-Lucent, a role he has coveted for a long time, according to industry sources

September 2, 2008

4 Min Read
Verwaayen Takes the Helm at AlcaLu

Former BT Group plc (NYSE: BT; London: BTA) chief Ben Verwaayen has been appointed as the new CEO of Alcatel-Lucent (NYSE: ALU) with immediate effect, the giant vendor announced today. (See Quigley Talk Boosts ALU.)

"Ben Verwaayen was appointed CEO by Alcatel-Lucent's Board of Directors on September 1 2008, and this takes place immediately," says an AlcaLu spokesperson. "He and Pat Russo will work together for a few weeks' transition period."

The 56-year-old Dutchman, who left BT on June 1, has been linked with the role since April this year, a few months before AlcaLu announced that Russo was stepping down. (See Is AlcaLu Seeking a New CEO? and Russo, Tchuruk Out at Alcatel-Lucent.)

He has been regarded as an ideal candidate because of his industry experience, his performance at BT, which was transformed under his leadership, and his ties with the vendor – Verwaayen was at Lucent for more than five years before he joined BT at the end of 2001. Prior to Lucent, he was at Dutch national operator KPN Telecom NV (NYSE: KPN). (See BT Snares Lucent Exec.)

In the vendor's press release, Verwaayen stated: “Alcatel-Lucent has a lot to offer: technological excellence, leading market positions worldwide, in developed as well as emerging countries, and a strong customer focus. The company operates in a quickly changing market and therefore is evolving. I'm truly delighted to become the CEO of Alcatel-Lucent, leading a company with vast assets and great talents, while recognizing the difficulties and challenges ahead. I am committed to building significant and sustainable value for our shareholders, customers and employees.”

Shareholders, customers, and employees will all now be waiting to see just how the new CEO believes AlcaLu should "evolve" in its "quickly changing market," and whether that will mean any further job cuts or changes to the company's product portfolio or R&D roadmap.

Verwaayen isn't the only new face in the AlcaLu boardroom: The company has also named Philippe Camus as its new non-executive chairman. The 60-year-old Frenchman, who is currently a managing partner at media company Lagardère, and a partner at New York-based investment firm Evercore Partners, takes over from Serge Tchuruk on October 1.

Today's announcement kills off any hopes that former Alcatel golden boy Mike Quigley might make a triumphant return as the new CEO, a suggestion that had been rife in recent media reports. (See Quigley Talk Boosts ALU.)

It also dampens any investor hopes that the appointment of a new lead executive might bolster the vendor's share price. At 10.15am on the Paris bourse, AlcaLu's share price was down by 1.6 percent to €4.24. That's 10.5 percent better than a month ago but nearly 47 percent down from this time last year.

Destiny fulfilled?
Some in the industry believe Verwaayen has wanted to run a combined Alcatel/Lucent for many years.

According to industry sources Verwaayen was keen on a merger between the two formerly independent vendors when he was Lucent's vice chairman during 2000 and 2001.

Those sources say Verwaayen championed a tie-up with Alcatel then, and had hoped to further his cause as Lucent's CEO. But he was overlooked for that role by chairman Henry Schacht, who allegedly wasn't so keen on a merger with Alcatel at the time. Schacht instead named Pat Russo as Lucent CEO, a decision that precipitated Verwaayen's exit from the U.S. vendor. (See Lucent's Next Leader.)

Interestingly, Schacht, who retained a Lucent board seat after he stepped down as chairman in February 2003, was a member of the AlcaLu board until late July: He resigned with immediate effect on the day that Russo announced her resignation as CEO. (See Russo, Tchuruk to Leave AlcaLu.)

Now Verwaayen has the chance to show the industry that his reputation, gained at BT, as a turnaround specialist is merited, something that might prove rather tough, according to one industry analyst.

“Verwaayen has a good track record, but it’s been spun into an outstanding one largely on account of his considerable charisma," says Heavy Reading senior analyst Patrick Donegan. "He will have to excel himself if he is to make anything like the impact on Alcatel-Lucent that he made on KPN and BT.”

The Dutchman certainly has his work cut out: AlcaLu has reported six straight quarters of losses since it was formed in late 2006. (See AlcaLu's Q2 Dragged Down by CDMA, AlcaLu Posts Loss, Warns on Full Year, AlcaLu Reports Q4 Loss of €2.6B, and so on…)

— Ray Le Maistre, International News Editor, Light Reading

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