Alcatel-Lucent to lose its CEO and chairman
Wednesday 30 July 2008
Alcatel-Lucent, the world's biggest fixed-line network provider, is losing its chairman and chief executive after six consecutive quarters of losses.
Net losses in the second three months of the year were €1.1bn (£870m), almost double the €586m loss in the same period of 2007. The numbers were not helped by a €810m write-down in the group's CDMA business, which relies on a wireless technology increasingly superseded by newer protocols such as W-CDMA and GSM.
Pat Russo, the chief executive, and Serge Tchuruk, the chairman – who were both closely involved in the merger of Alcatel and Lucent Technologies in 2006 – will step down later in the year as part of a board restructuring that will also see the departure of the former Lucent chief executive Henry Schacht. The company said yesterday that the changes are the natural culmination of the merger, and blamed the poor figures on a higher than anticipated pace of decline in the CDMA business.
But analysts were less forgiving, and the company's shares closed up nearly 2 per cent after news of the resignations.
"This should have come earlier because it has been painfully obvious to an outside observer for some time that there was a need to reduce exposure to CDMA," Sylvain Fabre, a research director at Gartner, said. "The market-leading position in CDMA was put forward as a key reason for the merger, but it is a shrinking market and serious questions should have been asked earlier on."
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