Report: Alcatel-Lucent board struggles to find CEO to replace Verwaayen

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The resignation of Alcatel-Lucent's CEO Ben Verwaayen has heightened the urgency to find a successor. According to a Bloomberg report, which cited unnamed sources, Alcatel-Lucent board members have not attracted much interest in the position after discretely contacting potential candidates over the past six months.

CEO Ben Verwaayen

Verwaayen

While Verwaayen resigned saying he didn't want to extend his contract past May of this year, he was insistent that the future CEO's role would be to execute the three-year plan he has presented to Alcatel-Lucent's board, the report said.

Alcatel-Lucent declined to comment on the board's deliberations or recruitment plans, according to Bloomberg.

"We're not going to cut the company up into pieces and put it up for sale," Verwaayen said after announcing his impending departure. "We have a coherent strategy, a plan, and we're going to execute it whether I'm here or not."

Despite Verwaayen cutting costs, selling assets and reducing headcount, industry analysts are calling for more. Verwaayen instituted a cost-cutting programme to save €1.25 billion, with around 5,500 job cuts. The company has also indicated it may sell some noncore assets.

"What needs to really happen is harsh action--Alcatel has to accelerate layoffs and cost cuts, but they may also need to rethink their portfolio," Exane BNP Paribas analyst Alexander Peterc told Bloomberg. "They're closing down some operations, but it's not the surgical action that we've seen at [Nokia Siemens Networks]."

While Verwaayen's decision to leave the company was unexpected, tension had been mounting within Alcatel-Lucent over the details surrounding the recent €2 billion loan agreement the company signed with Credit Suisse and Goldman Sachs.

Some board member were said to have considered the loan conditions too onerous, and instigated plans to find a replacement for Verwaayen, the Bloomberg report said.

Alcatel-Lucent Chairman Philippe Camus and the board have indicated that a European or American with a background in industry is now required to help the company catch its rivals, according to the unnamed sources.

However, Mark Hawtin, the head of investments at GAM, said: "The next chief executive needs to be an ace French politician as much as a great CEO. Alcatel-Lucent's future is a big and difficult problem because it's the fusion of two national assets, with national security interests involved as well as French labour laws."

Names of potential candidates are already being mentioned, according to John Keller at headhunters CTPartners. Olivier Piou, the CEO of digital-security company Gemalto and an Alcatel-Lucent board member, and NCR CEO William Nuti are two executives that are in the frame, Keller told the Wall Street Journal

To complicate the matter, major U.S. Alcatel-Lucent customers AT&T and Verizon Communications are expected to have a say in the selection of the next CEO, given they represent around 20 per cent of the vendor's global revenues, people close to the matter told the Journal.

For more:
- see this Verwaayen release
- see this earnings release
- see this Bloomberg article
- see this WSJ article (sub. req.)

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