As was noted a few days ago when Alcatel-Lucent’s (News - Alert) current CEO Ben Verwaayen announced his decision to step-aside, the imperative to find a replacement rather fast was important for a host of reasons including calming investor fears and expediting the “right-sizing” of the company at a critical time in the history of the industry where time truly is of the essence.
The Alcatel-Lucent (ALU) Board of Directors literally found their man, with the approval of the appointment of Michel Combes as the company’s new Chief Executive Officer, effective April 1, 2013. They also announced a bit of a Board shakeup as well with the appointment of former Nortel (News - Alert) CEO Jean Monty as the Vice Chairman of the ALU Board.
Whether they got the right man obviously is to be determined. In addition, having an experienced equipment sector executive like Monty on the Board in an influential position, is designed to give the 51 year-old Combes, former CEO of major service provider Vodafone (News - Alert) (where he was head of Vodafone Europe and a Board member of Vodafone PLC), somebody to lean on as the company goes through reviewing the assets it wishes to move forward with and those it would like to sell in order to gain renewed and sustainable profitability.
In fact, with talk already circulating about the sale of ALU’s under-performing Enterprise, submarine and optical business, Combes, based on a career spent mostly with service providers. His recent posts have also included being Chairman and CEO of TDF, CFO and Senior Executive Vice President of France Telecom, and coming off last summer’s agreement to be CEO at Vivendi (News - Alert)-owned French mobile operator SFR, only to have withdrawn after the sudden departure of Jean-Bernard Lévy as Vivendi’s chief executive.
In short, he is going to need the insights of equipment industry veterans from inside and outside ALU.
Philippe Camus, Chairman of the Alcatel-Lucent Board said, “It is a great pleasure for us to welcome Michel Combes to Alcatel-Lucent. As chief executive he will be responsible for delivering sustainable profitability. His deep knowledge of the industry as well as his experience of major business and financial transformation at a worldwide level will be pivotal in helping the company pursue its aggressive transformation, while meeting customer needs with disruptive innovation. I would like to warmly thank Ben Verwaayen (News - Alert) for his years of service for the company and wish him all the best for his future endeavors. Ben and Michel will work closely together over the next few weeks to ensure a smooth transition.”
He also stated how fortunate the company was that Mr. Monty had agreed to be the Board’s Vice Chairman.
Combes, who will be joining the ALU Board subject to shareholder approval at their annual meeting May 7, 2013, struck all the right notes in stating his pleasure with being offered what is going to be a significant set of challenges, stating, “Alcatel-Lucent is an unrivalled technology leader in the telecommunications industry with an immense array of talent and capabilities in R&D facing major challenges. This is a company I know well and I look forward to succeeding Ben, working with the key international customers, and driving the business into sustained profitability for its customers, employees and shareholders.”
The news was not greeted too well in the financial community whose analysts were widely quoted as saying that they were hoping for somebody with more cost-cutting experience. There have also been some eyebrows raised around the industry as to why ALU once again has reached into the ranks of the service providers for a CEO, based on the past six years of Verwaayen who also had large operator company background.
What will be most interesting in the next several months is the level of boldness Mr. Combes is likely to recommend to Monty and the Board in terms of realigning the company for future growth. He is under heavy pressure to downsize. Certainly shedding under-performing assets and chopping headcount are ways to get back to breakeven.
However, success in the market these days is based on being fast to market, fast in the market and investing heavily in both organic and non-organic innovation to take advantage of market opportunities is what I have called, “The Age of Acceleration.” Given the company’s obligations to its various stakeholders, including unions and investors, whether asset sales or better monetization of the company’s treasure trove of intellectual property, can get it back to profitability and give it the resources it needs to invest in innovation that can provide sustainable growth and profits may turn out to be Combes’ biggest challenge.
Edited by Braden Becker