Alcatel-Lucent (NASDAQ: ALU) named Michel Combes, a former CEO of Vodafone Europe, as its new CEO, charging him with returning the company to consistent profitability after the tumultuous tenure of Ben Verwaayen, who announced earlier this month he would step down.
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Combes, 51, will take the CEO spot effective April 1. He will also join the company's board, subject to the approval of shareholders at the Alcatel-Lucent annual general meeting on May 7. Combes, a 20-year industry veteran, has a reputation as a cost-cutter, which fits with part of Alcatel-Lucent's current strategy to reduce expenses. He also served as CFO and senior executive vice president of France Telecom.
Combes will take over as CEO as Alcatel-Lucent tries to find its footing amid intense competition from European rivals Ericsson (NASDAQ:ERIC) and Nokia Siemens Networks as well Chinese vendors Huawei and ZTE. Since the 2006 merger of Alcatel and Lucent, the company has built up about $13.4 billion in net losses, while its cash reserve has diminished by an average of $941 million a year, according to Bloomberg. Under Verwaayen, the company has posted a 15 percent decline in revenue, according to the Wall Street Journal. Verwaayen has agreed to stay on during the transition.
Alcatel-Lucent Chairman Philippe Camus praised Combes as the kind of leader the company needs right now. "As chief executive he will be responsible for delivering sustainable profitability," Camus said in a statement. "His deep knowledge of the industry as well as his experience of major business and financial transformation at a worldwide level will be pivotal in helping the company pursue its aggressive transformation, while meeting customer needs with disruptive innovation."
At Vodafone, Combes undertook a $3 billion cost-cutting program, slashing jobs and spending on network gear and logistics, according to Bloomberg. He also introduced usage-based data pricing in Europe.
Part of what Combes is likely to be tasked with is to continue the cost-cutting program Verwaayen instituted to save $1.68 billion, with around 5,500 job cuts. On Jan. 30 the company formally secured a $2.1 billion loan from investment banks amid continuing efforts to sell assets and cut costs. The company said that the loan, organized by Credit Suisse and Goldman Sachs, is backed up by its portfolio 29,000 patents, among other assets.
According to a Bloomberg report, which cited unnamed sources, the French government is considering taking a minority stake in Alcatel-Lucent as a way to protect the company's patents. The report said the investment might be made through the Fonds Strategique d'Investissement state investment vehicle. A spokesman for the French finance ministry declined to comment, as did representatives of Alcatel-Lucent, Credit Suisse and Goldman Sachs, according to Bloomberg.
For more:
- see this release
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this GigaOM article
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