Business

2 top execs resign at Alcatel-Lucent

Not much has gone right in the two years since France's Alcatel joined with its American counterpart Lucent to form a powerhouse in the telecommunications equipment business. Now the executives who made the deal happen have run out of time to fix the problems.

Alcatel-Lucent's Chief Executive Patricia Russo, who had said two months ago that she understood shareholders' disappointment, did Tuesday what many shareholders had been demanding: She resigned, as did Chairman Serge Tchuruk, her co-architect in the 2006 merger of the French and American companies.

“The time is right,” Russo said in a conference call.

Russo finally succumbed to the failure of the $11.4 billion merger to live up to expectations. Alcatel-Lucent's stock price has fallen by over 60 percent since the merger, the company has yet to post a profit, and already it has tried massive job cuts.

“Ms. Russo ran out of turnaround plans, and Alcatel-Lucent's board ran out of patience,” said James Post, a management professor at Boston University.

At the company's annual meeting in May, Russo – who had been running the AT&T spinoff Lucent before the deal – was greeted with jeers and whistles. Shareholders criticized her not only for the shares' slide, but also for her demeanor, her inability to speak French and her salary.

In 2007, she was paid $2.8 million, including benefits. She will leave the company with a severance package equivalent to two years' salary, or up to $9.4 million, company spokeswoman Regine Coqueran said.

Tchuruk, Alcatel's longtime chairman and CEO before the merger saw him take on the non-executive chairman role, said in a statement that the resignations were aimed at giving Alcatel-Lucent “a personality of its own, independent from its two predecessors.”

The Alcatel-Lucent merger was designed to boost profit margins through savings on expenses and research and development, while improving the joint company's pricing power with telecommunications network operators, its largest customers. The idea was to create a critical mass to compete with the likes of China's Huawei Technologies Co. and Ericsson AB of Sweden.

But because of intense competition in the industry, much of the savings Alcatel-Lucent has generated have been used on discounts to lure customers.

Tchuruk will step down Oct. 1, and Russo will resign “no later than the end of the year,” the company said in a statement.

Alcatel-Lucent shares closed up nearly 6 percent Tuesday as investors applauded the pair's departure.

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