The big take-away for wireless and other telecom-tech sectors in the wake of the latest Wall Street meltdown might mistakenly be this: By hook or crook, get as big as you can and implicate as many consumers (and their financial assets) to the greatest degree humanly possible. This might give you one last option before having to succumb to the bane of bankruptcy: A bountiful bailout choreographed by government for companies lavishly rewarded for gross mismanagement, unabashed greed and lax government oversight.
Welcome to the world of socialized capitalism.
It’s great if you’re Fannie Mae, Freddie Mac, Bear Stearns, IndyMac Bank, American International Group or Chrysler, but don’t count on a helping hand from the feds if you’re a struggling company in the telecom or tech space. The mobile-phone industry touches Americans far and wide owing to the 265 million subscribers it services. And consumers love their cellphones as much as life itself. But owning wireless devices does not necessarily put in the balance an individual’s pension, financial assets and ability to secure loans.
Still, it’s hard to imagine that companies in the financial and insurance sectors – even the healthy ones – will escape consequences of the financial chaos. However, the current economic volatility and government rescue packages are bound to intensify scrutiny on executive compensation – particularly golden parachutes given CEOs forced to step down from troubled companies.
Just ask the Communications Workers of America, the largest telecom workers’ union. They’ve taken aim at Alcatel-Lucent’s outgoing Chairman Serge Tchuruk and CEO Patricia Russo, sacked as a result of the company’s downward spiral since the 2006 merger. Since the alliance was formed, Alcatel-Lucent reportedly has lost $7 billion and laid off 9,000 workers. Some 7,500 additional job cuts apparently are on the way. CWA said Russo is in line for a severance package of more than $9.4 million.
In the United States, “the last of the Alcatel-Lucent manufacturing jobs have been eliminated and shifted offshore with the shutdown of the Merrimack Valley facility (in Andover, Mass.),” said Ralph Maly, CWA VP for communications and technologies. Maybe not. The Chicago Tribune reported pink slips were given Thursday to about 350 employees in Illinois and New Jersey locales tied to Alcatel-Lucent’s North American CDMA development.
Unlike exiting, well-endowed CEOs, American telecom workers on their way out are not apt to have soft landings.