Alcatel-Lucent Names Verwaayen CEO, Camus as Chairman
Alcatel-Lucent SA, the world's largest supplier of fixed-line phone networks, chose former BT Group Plc Chief Executive Officer Ben Verwaayen to run the company as it seeks to end six straight quarters of losses.
Philippe Camus, co-managing partner of Lagardere SCA, will serve as non-executive chairman of the Paris-based company, Alcatel-Lucent said in a statement today. Verwaayen and Camus replace Patricia Russo and Serge Tchuruk, who said in July they're leaving Alcatel-Lucent after $7 billion in losses since the merger that created the company.
Verwaayen, 56, gives Alcatel-Lucent a CEO who worked both at telecommunications carriers and at Lucent Technologies Inc., the U.S. equipment maker acquired by Alcatel SA in 2006. At BT, the U.K.'s largest phone company, he cut about 5,000 jobs a year as sales fell at the land-line voice business and profit slumped as rivals began offering high-speed Internet access.
``Similar to Alcatel-Lucent, BT was perceived as a company in poor condition before Verwaayen took over,'' said Alexander Peterc of Exane BNP Paribas, the top European communications- equipment analyst in Thomson Extel's June survey, via phone Sept. 1. ``So he has to do the same again and cut costs, accelerate the restructuring, focus the company on the right market segments and instill confidence in the organization and its employees.''
Alcatel-Lucent fell 16 cents, or 3.6 percent, to 4.15 euros at 9:25 a.m. in Paris trading. Some investors may be disappointed that the board didn't pick Mike Quigley, a former Alcatel SA president, as chief executive, Peterc said in a report today. The stock also may be falling because Alcatel-Lucent is being removed from the Dow Jones Euro Stoxx 50 Index, he said.
Before today, Alcatel-Lucent shares had fallen 46 percent in the past 12 months, compared with a 34 percent decline in the Bloomberg Europe Telecommunication Equipment Index.
Losses mounted in the past two years at Alcatel-Lucent amid spending cuts at customers including Sprint Nextel Corp. and price competition from Ericsson AB and Huawei Technologies Co. The company also struggled to integrate different product lines.
``I know I'm an optimistic guy, but I feel we have absolutely great assets,'' Verwaayen said in a conference call with reporters. ``That thing that has struck me most is that there is a very clear path for this company going forward.''
Alcatel-Lucent said July 29 that Russo, 56, would step down as chief executive officer by the end of the year, while Tchuruk, 70, would leave as chairman Oct. 1. The two were the architects of a merged company that shed 57 percent of its market value and is eliminating 16,500 jobs. Russo was the CEO of Lucent while Tchuruk ran Alcatel.
In July, Alcatel-Lucent reported its sixth straight quarterly loss. The second-quarter loss widened to 1.1 billion euros from 586 million euros a year earlier, hurt by a writedown at a unit that supplies wireless networks based on code division multiple access, or CDMA.
Quigley, who quit Alcatel-Lucent in August 2007, was also a candidate for the top job, according to the Aug. 27 edition of Le Canard Enchaine, a Paris-based weekly newspaper. Camus declined to comment about Quigley on today's conference call.
BT's stock returned an average of about 4.4 percent annually including dividends during Verwaayen's tenure, compared with 6.6 percent for the FTSE 100 Index and 2.9 percent for the Bloomberg Europe Telecommunication Services Index.
`Months of Reflection'
``I was happy to have a few months of reflection and at the swimming pool, as they say, but it is great to be back,'' said Verwaayen, who left BT in June. ``I'm here in the office of Alcatel, so I guess I started, and it feels very good.''
Verwaayen, a native of the Netherlands who speaks English and French, joined BT in February 2002 from Lucent, where he was vice chairman. He spent four years at Lucent after a decade at Royal KPN NV, the largest Dutch phone company.
``Verwaayen has the advantage that he has been the CEO of a network operator, so he knows what Alcatel-Lucent's customers want,'' said Exane BNP's Peterc.
Camus, 60, is a French citizen and U.S. resident. He previously was co-CEO of European Aeronautic, Defence & Space Co., the parent of Airbus. He has been co-managing partner of Lagardere since 1998, and since 2006 also has been a partner at Evercore Partners Inc., the New York-based merger advisory firm led by former U.S. Deputy Treasury Secretary Roger Altman.