Changes keep occurring in the network equipment market at a rapid clip. Vendors have been taking themselves private, merging, developing new product lines, and dumping old mainstays. Alcatel-Lucent is the latest supplier to undergo a metamorphosis. Weighed down by the marketï¿¼s intense competition and recent lackluster performance, the vendor has brought in a new management team to prop up its floundering market position.Former BT Group chief Ben Verwaayen has been appointed as the new CEO of Alcatel-Lucent. He has lots of industry experience, performed well at BT, and has ties with the network equipment provider, working at Lucent for more than five years (including as vice chairman) before joining BT at the end of 2001.
Changes have been in the offing for a while at Alcatel-Lucent. In July, the company announced that it would seek a replacement for Chairman Serge Tchuruk, whose position was taken by Phillipe Camus, and Chief Executive Patricia Russo, who was overseeing the vendorï¿¼s daily operation. The twosome drove the merger in December 2006 and then had charted the companyï¿¼s subsequent course. The results of their plans have been horrific: six straight quarters of losses. In addition, the companyï¿¼s stock has lost more than half its value.
Like many of the traditional network equipment suppliers, Alcatel-Lucent has had trouble adjusting to new market dynamics. Movement to low-cost, off shore production and rapidly shrinking product life cycles have made it difficult to turn a profit. The company, which had traditionally focused on large enterprise accounts, recently shifted its focus to the small and medium business market to turn the firm around.
With a new management team settling into place, it will be interesting to see what happens with that strategy. What type of changes will be made the company's product portfolio and R&D roadmap? Also, will more employees be given pink slips ï¿¼ the vendor is under pressure from investors to reduce its operating expenses? It was evident that changes were needed at the company, and plenty are being made. However at the moment, there are more questions than answers about the companyï¿¼s long term strategy and viability.
How much impact do you think a new CEO has on an established vendor? What is the best case scenario for Alcatel-Lucent? Where do you think the company will be in two to three years?