U.S. News

Europe Preview: Alcatel-Lucent CEO on the Hotseat

Patrick Allen, |News Editor

It's not easy being Alcatel-Lucent boss Patricia Russo. Tomorrow she goes before shareholders in Paris for the company's annual general meeting amid reports that her golden parachute of €6 million will be tied to performance. Russo will be hoping that parachute payment is some way off, but speculation that she'll be sacked—given the group's awful share price performance since the 2006 merger that formed the company—just will not go away.

Alcatel Lucent

Shares are off nearly 53 percent since the deal, despite Russo cutting 12,500 jobs. Demand in the telecoms equipment market has been weak and competition fierce with rivals like Cisco and Ericsson trying to gain market share. During the same period, shares in Alcatel-Lucent’s two biggest rivals have fallen by 1 percent and 37 percent, respectively. Alcatel-Lucent shareholders are becoming impatient.

As Gartner's first-quarter review of the mobile handset showed Wednesday, the industry is facing a significant slowdown in mature markets. With the global economy expected to be weak well into 2009, the telecom equipment market is unlikely to come to Russo’s rescue.

In order for her to receive her full payment when she eventually goes, she'll need to meet 90 percent of revenue targets and 75 percent of operating profit targets, under the terms of a shareholder proposal that would take effect in 2009. Those targets could prove difficult. If the proposal is backed by holders at tomorrow’s meeting, Russo could well be leaving Alcatel-Lucent with substantially less than €6 million when the chop finally comes.

Russo and the Alcatel-Lucent Board continue to deny she is close to leaving. But given her failure to integrate the companies' US and French workers and production models, it's unlikely she'll be given long to put things right if earnings continue to disappoint.

All-American Bud!!

My colleague in London, Geoff Cutmore, today outlined how US beer drinkers could benefit from a little Belgian expertise if InBev is successful in a takeover of Anheuser-Busch. The response from many readers has been to unfurl the Stars and Stripes and tell InBev management team to back off. As something a connoisseur of both US and European brews, I have to say this patriotism is misplaced.

European beer is far superior to the weak, tasteless stuff made Stateside. I would take a Stella Artois over a Bud Light any day of the week. There are decent microbreweries in cities like New York, Boston and elsewhere, but the big brands are just far better on this side of the Atlantic. Those Americans with passports should try a REAL Bud in Prague or come to the UK and try a pint of Harvey’s on the Sussex coast. Oh, and my Grandma in South London makes the world’s best apple pie.