I guess if you lose a few billion dollars, someone has to take the blame. Or at least that was the case last week at Alcatel-Lucent, where after posting another quarter of underwhelming results, one of the wireless industry’s largest infrastructure providers decided a change at the top was in order ; the company said CEO Patricia Russo would leave once a replacement is found.
Despite all the spin that accompanied the merger between the French-based Alcatel and U.S.-based Lucent Technologies back in 2006, the combined entity, and in particular Russo, had very little chance of succeeding, at least in the near-term. Alcatel was a small player in the international scene dominated by GSM-based technologies and Lucent’s dominance in the CDMA market was tied too closely to too few carriers. In 2006, those carriers were already well into their respective CDMA technology deployments.
Alcatel-Lucent blamed some of its latest quarterly troubles on spending cuts by a domestic CDMA carrier – either Verizon Wireless or Sprint Nextel, depending on the report. Whichever carrier was the culprit, both are largely done deploying Revision A enhancements to their CDMA networks with no further updates expected for some time. This was compounded by increased competition from Chinese vendors, which have quickly become significant players in the space.
Mergers are always a tricky proposition and in many cases they seem to not work out. In the wireless industry we have seen Sprint Nextel’s struggle to find its footing after getting together, and outside there are numerous cases of two seemingly like-minded companies struggling to integrate following multibillion-dollar mergers. Hello Daimler-Chrysler.
Russo was one of the few executives who was accessible for the media at industry events. Many times execs are promised to be attending a meeting, only to be replaced at the last minute by a marketing person. But with Alcatel-Lucent, when Russo was said to be attending a meeting, she was always there.
Of course, there is little reason to feel sorry for Russo. According to Business Week, if she leaves before the end of the year she is privy to a $9.5 million severance package.
So maybe it’s not so bad to take the rap for a merger gone bad.
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