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Summary:

During its second- quarter earnings call earlier this morning, telco gear maker Alcatel-Lucent said its chairman, Serge Tchuruk, and its CEO, Patricia Russo, would step down. Both said they were stepping down because consolidation after the 2006 merger was complete, and now the company needed someone […]

During its second- quarter earnings call earlier this morning, telco gear maker Alcatel-Lucent said its chairman, Serge Tchuruk, and its CEO, Patricia Russo, would step down. Both said they were stepping down because consolidation after the 2006 merger was complete, and now the company needed someone to take it in a new direction. Russo will leave at the end of the year or sooner if the board finds a replacement, and Tchuruk will leave Oct. 1. Russo especially had faced demands for her departure as the newly combined company lagged.

Demand is falling for Alcatel-Lucent equipment, while its carrier customers contemplate the slow migration to 4G technologies such as LTE and WiMAX. The next-generation networks are coming but are still several quarters out,with LTE networks coming online in 2010 and full deployment closer to 2012. WiMAX is growing now, but it’s a smaller market. Another wrinkle is that some carriers such as Vodafone in the UK are content with their 3.5G networks and don’t plan to move to LTE for even longer.

Given its main customers’ plans around network build-outs, plus the lackluster economic environment, Alcatel-Lucent has been seeking alternatives to telco networking gear, including outfitting electric utilities with smart-grid equipment. It’s a shame that the Alcatel-Lucent deal is faring so poorly, because more consolidation is still needed in this sector.

  1. Hi Stacey,

    Why do you think more consolidation is needed in this sector?

    -Harish

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  2. Stacey Higginbotham Tuesday, July 29, 2008

    Harish, the top vendors (by market share) still have pretty low operating margins and their customers are still consolidating, especially in developing markets. It’s pretty competitive out there for gear makers, and there are vendors such as Motorola, Nortel and Huawei who have such tiny market shares, consolidation just seems in order.

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  3. [...] giant, Alcatel-Lucent gave CEO Pat Russo and Chairman Serge Tchuruk the proverbial boot, after the company reported a disastrous quarter, missing its earnings and revenue targets. The company says they resigned – [...]

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  4. [...] (0) Ben Verwaayen, former CEO of BT Group is coming home – so to speak. He is going to replace Alcatel-Lucent CEO Patricia Russo and Chairman Serge Tchuruk. The Franco-American company has proved to be a corporate mismatch that makes the unlikely pairing [...]

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