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Optical/IP

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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digits 12/5/2012 | 3:33:17 PM
re: Verwaayen Takes the Helm at AlcaLu are you suggesting that this constitutes "already dead or dying"?

The CDMA business is one thing, as we have pointed out in a number of articles in the past, but is a company that is generating revenues of Gé¼2.8 billion euros in one quarter while it's in something of a management mess -- and that's about Gé¼200 million a WEEK -- a commpany that's on its last legs?

I'm not sure there are many people that would say ALU is in rude health, but to say it is "dying or already dead in most markets" - which is the statement I challenged - still doesn't look representative to me.

Unless I am mistaken, AlcaLu is still one of the leading players in the optical, fixed access, and edge router sectors, all of which are key to new network builds, and its services operation is not to be sniffed at.

I would still contend that "dying or already dead in most markets" is not a fair comment. IMHO.
berty 12/5/2012 | 3:33:12 PM
re: Verwaayen Takes the Helm at AlcaLu Everybody loves Ben or at least the media & financial community suggest he is the greatest.

His contribution to be BT can be explained as follows:
- Stablised the stock and company
- Aggressively introduced new service revenue streams
- Created a vision with 21CN.

Stablised stock and company: He sold the fast growing mobile unit which was a saviour in the short term but would eventually be regreted. This was a simple solution that all the peer in Europe had to resolve their financial difficulties but the bankers only persuaded BT/Ben to do it!

Created new revenue streams: All BT peers did the same but at a much faster rate.

Vision: 21CN has been a failure which was diven by the imagination of the Ben and his new CTO. This initiative was the best diversion to allow Ben to maintain his position at BT.

Wisely Ben V left BT before these problems became more evident to the financial community.

What has he left at BT?

- A major carrier with NO mobile unit that is set to decline over the next 10 years unless rescued by Vodaphone!

- A carrier that lags all its peers with respect to the introduction of video the only life line left for a wired carrier

- 21CN that is now not mentioned by BT because it is the biggest failure since Highgate.

Ben has moved on and will do the same for Alcatel/Lucent, for this company, without French government intervention, is set to slowly die away.

Bert

PS: Ray when are you going to do an obituary on 21CN?

NeuronHammer 12/5/2012 | 3:33:01 PM
re: Verwaayen Takes the Helm at AlcaLu > Unless I am mistaken, AlcaLu is still one of the
> leading players in the optical, fixed access, and
> edge router sectors, all of which are key to new
> network builds, and its services operation is not
> to be sniffed at.

Ray, I may challenge this sentence.

Lucent had some wonderful optical gear, however:
* upfront the merger, system-development was stopped for some new products (high-profit/high-margin products)

* systems like LambdaUnite optical crossconnects, metro-systems like MetroDMX were set to "not for new customers and not for new tenders". These were highly profitable products that just would have needed a small face-lift and some additional circuit packs for more functionality also in the Datacom market.

* systems like MetroADM were set to "aggressively ramped down products"

* systems like the 40G LambdaXtreme stayed, eating up hundreds of millions of development costs, and close to no one is buying them (instead NSN, Nortel or Marconi/Coreoptics gear is chosen). Advanced stuff ? Yes. Sellable ? No !

* or WaveStar 1.6T systems. They were high-end earlier, but now the margin on these systems is going lower and lower and lower.

* Mr.Wirth(less) bought Riverstone for $207.000.000 shortly before the ALACU merger annoucement and, well, R.I.P. Riverstone.


What is left of the old Lucent gear, that is still presented in tenders ? I have no answer. Maybe others can help.

What is then left ? Alcatel TSS1850 stuff with all the subvariants that need some heavy facelifting plus some 16xx systems, and here I can't challenge you with more in-depths info I admit. But the old glorious Lucent equipment is gone since the merger time.
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