Alcatel-Lucent CEO Ben Verwaayen is leaving the loss-making French-U.S.
telecommunications gear maker after a failed four-year bid to turn the
business around.
Verwaayen said in a statement Thursday that it was
"clear to me that now is an appropriate moment" for Alcatel-Lucent to
seek new leadership. Investors cheered the news, with shares jumping 7.7
percent in early trading to pound 1.40.
The Dutchman's surprise
departure comes as Alcatel-Lucent reported losing pound 1.37 billion ($1.85
billion) last year, compared with a pound 1.1 billion gain a year earlier.
No
details on Verwaayen's replacement were provided. He has agreed to stay
on as caretaker until a successor can be found. Alcatel-Lucent said it
will look at candidates both internally and from outside the company.
Verwaayen
joined Alcatel-Lucent in 2008 after the ouster of the previous
management led by American Patricia Russo. Russo and her French
counterpart Serge Tchuruk had masterminded the $11.6 billion merger of
Lucent of the U.S. and Alcatel of France. The combined company has
racked up many billions of euros in losses since its creation in 2006,
something Verwaayen has spent four years trying to reverse.
Alcatel-Lucent
supplies telecom operators and corporations the technology for building
global communications networks. It has suffered from repeated rounds of
costly layoffs and restructuring, as well as intense competition from
the likes of Ericsson of Sweden, China's Huawei and Nokia Siemens
Networks, a Finnish-German joint venture.
The Franco-American
company is in the middle of a pound 1.25 billion restructuring program aimed
at cutting 5,500 jobs, ending unprofitable contracts and leaving or
reorganizing operations in poor markets.
Verwaayen said Thursday
the company has "seen progress" on the plan announced last July, and
pointed to growth in its order book as a sign of customer confidence.
Alcatel-Lucent
had aimed to raise its profitabilty from the 3.9 percent adjusted
operating margin achieved in 2011, but abandoned that target halfway
through the year. It finished 2012 with an adjusted operating margin of
only 2.9 percent.
Last year's earnings were hit by a further pound 1.4
billion charge as Alcatel-Lucent continued to account for the falling
value of past acquisitions and its own fixed assets.
Verwaayen was
lauded on arrival in October 2008 after for transforming BT Group from a
troubled, loss-making phone operator into a profitable and aggressive
leader in broadband Internet access. But Alcatel-Lucent proved to be a
tougher challenge than expected. Sales slid 5.7 percent last year to pound 14.4 billion and the group continued to burn cash, recording a
seventh-consecutive year of negative cash flow.
Whoever steps in
to replace Verwaayen will have to uncover a fresh path to profitability,
after seven years of restructuring failed to achieve goals set out at
the company's creation.
The Alcatel-Lucent tie-up was designed to
boost margins through cost and research and development savings, while
improving the joint company's pricing power with telecom operators, its
largest customers.
The combination was seen as creating the
critical mass needed to compete with the likes of China's Huawei
Technologies Co. and Ericsson AB of Sweden.
But intense
competition in the telecoms industry has meant many of the savings have
been used on discounts passed to customers, and analysts said
Alcatel-Lucent has not coped as well as some of its competitors.