Jump to navigation
Jump to search
Thierry Breton, France’s former Finance Minister, is being touted as a leading candidate to take the helm of Alcatel-Lucent, the world’s largest telecoms equipment supplier, after Patricia Russo, its US chief executive, and Serge Tchuruk, its French chairman, both announced their resignations.
However, Mr Breton, who was chief executive of France Telecom before he joined the French Government in 2005, may face opposition from American board members over his proximity to the Parisian political establishment, sources said.
Alcatel-Lucent began the hunt for a new chief executive after Mrs Russo, 56, threw in the towel amid growing criticism of her management of the group formed in 2006 by the merger of France’s Alcatel and Lucent of the US in 2006.
In a statement, she announced she would quit before the end of the year in a move which signals the fall from grace of an industrialist often hailed as one of the most powerful women in the world.
Mr Tchuruk, 70, the respected French business leader who headed Alcatel for 11 years before engineering what was effectively the takeover of its American rival, will step down in October.
Already under fire from shareholders following a 60 per cent fall in the value of Alcate-Lucent stock since the merger, Mrs Russo, who earned €1.83 million last year, faced further anger yesterday over her €6 million severance package..
Didier Cornadeau, president of the French Association of Active Small Shareholders, described the golden handshake as a scandal.
“It’s much too much…especially given the damage she has done.”
Mr Tchuruk, who received €5.6 million compensation under the terms of the merger, will not receive a golden handshake.
Investors and analysts gave a broad welcome to the resignations which they said could herald a fresh departure for the troubled Franco-American group. Most had been expecting Mrs Russo’s departure, but not that of Mr Tchuruk.
Gregory Olszowy, an analyst at IT Asset Management in Paris, said: “This is indeed very good news. Their departures show the merger has not worked.”
He urged Alcatel-Lucent to slim its mobile telephone divison and focus on fibre optics and the land-line business.
“It will be difficult for Alcatel-Lucent to win out against Ericsson or Nokia,” he said.
The merger was designed to create a critical mass amid competion from the likes of China’s Huawei Technologies, with savings in research and development costs and a stronger negotiating position with telecom operators.
But it has foundered as operators, particularly in US, have slashed investments – fuelling the belief amongst investors that Lucent was overpriced in the deal.
Critics say management has also failed to overcome deep Franco-American cultural differences which have hindered integration. Mrs Russo’s inability to speak French was seen in Paris as symbol of the gulf.
“The problems existed already before the takeover of Lucent, which has only made the situation worse,” said Mr Olszowy.
The failure was underlined today as the company reported a net loss of €1.1 billion for the second quarter after taking a €810 million goodwill writedown. This compares with a €586 million loss for the same period last year and is the sixth successsive quarterly loss.
Alcatel-Lucent, which made a net loss of €3.52 billioni n 2007, reported revenue second quarter revenue of €4.1 billion, down 5.2 percent, and said sales would stagnate or decline in the third quarter.
Analysts said the group could move to sell its 20.8 per cent stake in Thales, the French defence electronics group – worth about €1.5 billion – following Mr Tchuruk’s departure.
Heath Aston
Times Online
July 29, 2008