Loss-making telecom equipment maker Alcatel-Lucent has picked Michel
Combes, the Frenchman who steered Vodafone's European business through
the financial crisis, as its new chief executive.
Combes, 51 and a
former finance chief at France Telecom, will replace Ben Verwaayen, who
led Alcatel-Lucent for five years but failed to deliver a long-promised
The Franco-American group, which plunged to a net loss
of 1.37 billion euros in 2012, has been hit hard by the rise of
low-cost Chinese competitors in the past decade and trails market
leaders Sweden's Ericsson and China's Huawei in size and market share in
Combes, who will take over on April 1, had been
picked last year to head Vivendi's SFR, France's second-biggest mobile
operator and another business in need of a revamp. But that appointment
was aborted after a management shake-up at the parent company.
Vodafone from 2008 to 2012, Combes had to cut costs and market
innovatively to cope with a slump in consumer spending in southern
European markets such as Spain and Italy.
"Combes is a good choice
since he has a 20 year track record in telecoms, and knows the French
political establishment well," said one industry analyst.
experience managing difficult situation like the recession that hit
southern Europe when he was at Vodafone. But the challenges at Alcatel
are of a different magnitude: everything easy has already been tried and
nothing has worked."
At 0852 GMT, Alcatel-Lucent shares were up
2.5 percent at 1.168 euros, outperforming a 1.1 percent rise in France's
benchmark stock index.
The task ahead
Since it was formed
in a merger in 2006, Alcatel-Lucent has gone through two chief
executives and not been able to reach sustainable profitability or cash
flows despite cost-cutting and paring its product portfolio.
group has strong technology in fixed broadband, optical transmission
gear in the backbone of networks, and fourth generation (4G) mobile, but
has suffered from the costs of maintaining a broad product portfolio.
U.S. market, which is closed to Chinese competitors and where operators
have invested heavily in 4G, has saved it in recent years as it lost
share in Europe and Asia.
The challenges facing Combes, who will
be Alcatel-Lucent's first French chief executive since its 2006
formation, will be to continue cutting costs and making the company
smaller, while not falling behind rivals in research and development.
also have to contend with the political fallout of restructuring in
France, where the Socialist government has expressed concern but taken
little action about the group.
Here, his experience at partly
state-owned France Telecom could help. At the former monopoly, he
oversaw restructuring and deep cost cutting alongside then CEO Thierry
Alcatel-Lucent also named Jean C. Monty as vice-chairman
of the board, effective immediately. Monty, 64, is a former chairman and
chief executive of Bell Canada Enterprises.
Alcatel-Lucent's current chairman, will likely stay on since he has
requested another three-year mandate, said a spokesman for the company.
The mandate must be approved at the next shareholders' meeting on May 7.
is in the middle of a 1.25 billion euro cost-cutting plan that will
result in some 5,500 layoffs and exiting of unprofitable contracts and
In January it finalised a financing package of 2
billion euros, and put up its portfolio of 29,000 patents as collateral
to assuage lenders concerned about its viability.
© Thomson Reuters 2013