Telecom equipment group Alcatel-Lucent on Tuesday dumped both its chairman and chief
executive in a bid to cement a still-fragile merger after a series of profit warnings and market share decline.
Chief Executive Pat Russo, long rumoued to be on an ejector seat, will leave before the end of the year while Serge Tchuruk, the architect of the 2006 merger, will leave on Oct 1., the company said in a statement.
The move comes weeks after shareholders heaped criticism on top directors following a string of profit warnings and a collapsing share price, and approved measures that would make it easier to oust them.
Alcatel-Lucent, the world's largest provider fixed-line telecoms equipment, was created when Paris-based Alcatel bought Lucent of the United States.
"These departures are not a total surprise," said Exane analyst Alexander Peterc. "It is a good thing that the company can now move forward and put behind it the differences between the Lucent parts and Alcatel side," he added.
Henry Schacht, a former Lucent chief executive until Russo took his job in 2002, will immediately resign from the board.
Alcatel-Lucent said both Tchuruk and Russo had decided themselves to resign. It said the board would commence a search for a new non-executive Chairman and CEO immediately.
"The Board is also initiating a process to change the composition of the Board to a smaller group that will include new members," it added.
Tchuruk, born in November 1937, is a former arms engineer born to Armenian parents in Marseilles who climbed the corporate ladder to become head of oil group Total before joining Alcatel in 1996.
A tireless strategist, he engineered a restructuring of the sprawling Alcatel empire into the core telecoms activities, a defense branch that became part of Thales and the Alstom industrial engineering group.
The merger with Lucent was meant to crown his career as it pulled the equipment firm back to the front line of global competition with Nortel, Nokia Siemens Networks and Ericsson.
"The merger phase is now behind us. I am proud that Alcatel-Lucent has become a world leader in a technology which is transforming our society," Tchuruk said in a statement. "It is now time that the company acquires a personality of its own, independent from its two predecessors," he added.
Alcatel-Lucent also reported underlying April-June sales and profits which came in slightly ahead of expectations, but reported a major net loss for the quarter due to writedowns.
The group reported adjusted operating profit of 93 million euros ($146.5 million) for April-June against a loss of 19 million in the same period last year. Analysts expected the company to report operating profit of 64 million euros.
Alcatel-Lucent's April-June net result fell to a loss of 1.1 billion euros, hurt by an 810 million euro writedown from its CDMA operations.