The subject of an article on corporate governance published on high profiles news, the preferred information site for senior executives, Alcatel-Lucent has named the Ben Verwaayen-Philippe Camus duo who will have a lot to do to relaunch the world’s number one telecom network fixed assets, whose share has collapsed since its creation in December 2006.Philippe Camus, 60, co-manager of the Lagardère group and former co-CEO of EADS, succeeds Serge Tchuruk, who will leave the group on October 1 . Dutchman Ben Verwaayen, 56, a former Lucent Technologies executive who ran BT until June 1, is in charge of the group’s general management, replacing Patricia Russo.
The outgoing management, whose departure was announced on July 29, did not manage to overcome the difficulties linked to the implementation of the merger. Its competitors, in particular Ericsson, took the opportunity to take market share from it. The group has multiplied the “profit warning”, the quarterly losses under the influence of asset impairments, mainly from Lucent, and job cuts.
Analysts said the new management will need to review and clarify the group’s strategy, a task that could take time given the difficulties it faces in a tough telecoms equipment market with the emergence of aggressive price competitors from Asia.
The action, which has risen in recent days in anticipation of the appointment of a new management, lost 1.18% to 4.25 euros around 10:35 a.m. The stock, which will leave the Euro Stoxx 50 index on September 22, has fallen 14% since the start of the year after plunging 54.6% in 2007.
Alexander Peterc, an analyst at Exane BNP Paribas, noted the speed of the board’s reaction.
“They have found someone who has good international experience and in telecoms as managing director,” he underlined. “Philippe Camus will be a truly non-executive chairman so the conflicts seen previously in the old leadership should not reoccur”.
“The group faces a very, very difficult task and will have to take tough action to streamline operations,” WestLB analyst Thomas Langer said. “Upcoming measures will not only affect the cost structure but also the product portfolio,” he added, saying to expect announcements as soon as the third quarter results are released on November 3.
TOO MANY PLATFORMS
During a conference call, Ben Verwaayen did not give any indications on his future strategy, in particular concerning possible asset sales.
“We should move towards the best integrated portfolio in which it doesn’t matter if the idea comes from the left or from the right,” he said.
“The problem we have in the industry is that there are too many platforms,” he observed. “The question is not whether or not to be in next-gen networks, of course you have to be, but how many platforms there are under the same brand”.
Ben Verwaayen had left KPN to join Lucent Technologies in 1997, where he was vice-chairman of the management committee, before joining BT in February 2002. Avoiding the dismantling of the group by agreeing to open up its network to its competitors, he led BT’s broadband internet offensive, which helped drive up its share price.
NO GOLDEN PARACHUTE
Unlike Patricia Russo whose “golden parachute” had provoked the fury of shareholders at the fall of the action, Ben Verwaayen will not receive severance pay. He will receive an annual fixed compensation of 1.2 million euros, just like the outgoing CEO, to which will be added a target bonus of 1.8 million, options and free shares, all subject to performance criteria. .
Philippe Camus, who will retain all his functions at Lagardère, will receive annual compensation of 200,000 euros and 100,000 free shares subject to performance criteria, while his predecessor only received attendance fees, or around 100,000 euros.
Patricia Russo had also drawn the wrath of the unions, enraged by the 12,500 job cuts planned by 2009.
“I don’t think that massive downsizing is, as such, the right way to improve a business,” said Ben Verwaayen, who has also cut jobs at BT.
Last week, the market had bet on Mike Quigley who had succeeded Philippe Germond in 2005 as number two at Alcatel, after the publication of information to this effect in Le Canard Enchaîné. The 55-year-old Australian was considered Serge Tchuruk’s “dauphin” to chair the French group until the merger with Lucent.
The names of Philippe Germond, 51, current chairman of the management board of SSII Atos Origin, and Thierry Breton, former Minister of the Economy and former CEO of France Telecom, had also circulated.
It is now up to the new leaders to provide the new strategic vision that Alcatel-lucent will need to emerge from its current difficulties.
