Alcatel-Lucent ditches both CEO and chairman
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Architects of disastrous merger lose their jobs
Telecommunications giant Alcatel-Lucent today announced the resignation of both its chief executive and chairman. The move has been described as an admission that the 2006 merger of Alcatel and Lucent has been a failure.
CEO Pat Russo will be gone by the end of the year, while chairman Serge Tchuruk has until 1 October to clear his desk. Russo told reporters that “the company will benefit from new leadership to bring a fresh and independent perspective”.
This week, the company revealed that it lost €1.1 billion during its second financial quarter of the year – its sixth consecutive quarterly loss. That is roughly three times the €336 million loss that Alcatel-Lucent reported in the same quarter of last year.
Alcatel-Lucent's ill-fated CDMA division continues to be its biggest loser. The company wrote down the value of its division that sells technology based on the wireless transfer protocol by €810 million.
The idea behind the merger of what were two industry-leading companies was to create $1.7 billion worth of ‘synergies’. Two years and more than 16,500 redundancies later, the market capitalisation of the combined company has dropped by over $20 billion. It has never made a profit.
“This is a public admission, if ever one was still needed, that the merger was a failure,” Niclas von Stackelberg, an analyst for German investment bank Sal. Oppenheim, told the Reuters news agency.
Further reading
Alcatel-Lucent loses $3.7 billion in one quarter
Alcatel-Lucent cuts 4,000 jobs
Alcatel-Lucent hones enterprise focus
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