Verwaayen Leaves ALU Amid $1.8 Billion Loss in 2012
Alcatel Lucent CEO Ben Verwaayen announced today that he is leaving the company. Verwaayen made the announcement as the company today reported a $1.8 billion loss for 2012, that's up from a $1.4 billion loss in 2011.
Verwaayen will not seek re-election as a director at this year’s annual general meeting, and will step down as CEO once a successful transition has been executed, the company said.
In a statement, Verwaayen said that the decision to leave was a "difficult" one, adding that it was clear "that now is an appropriate moment for the board to seek fresh leadership to take the company forward.”
Hired on in 2008, Verwaayen succeeded Patricia Russo, who was then CEO of Lucent Technologies. Russo was instrumental in merging Lucent Technologies with Alcatel.
While Verwaayen noted in a statement a combination of recent refinancing and the implementation of a restructuring plan as initiatives that will "put the company on a secure footing," that wasn't what investors were seeing. Verwaayen had been criticized in recent years for those very plans failing to return the company to profitablity.
In this most recent quarter announced today, the company's wireless equipment division was one of few bright spots. The company said revenues for the wireless division stabilized to $1.2 billion, an increase of 2.2 percent from the year-ago quarter, after four straight quarters of double-digit declines.
The company said the transition from 2G/3G to 4G in North America and an overall continued cautiousness in the rest of the world has led to a 35 percent decline of legacy technologies, which was partially offset by strong LTE growth.
Even with the steep annual loss, Verwaayen's departure was enought to send shares of ALU on the rise. The company was trading up just over 2 percent to $1.75 as of 9:30 a.m. EST.
Industry analyst Jeff Kagan said in comments that he thinks new leadership will be enough to turn the company around.
"I firmly believe leadership is the key. Just like the ingredients can make any dish either delicious or a disaster, the right leadership is key here," Kagan said, but added that time is of the essence.
"They must find the right leader and strike out on the right path quickly, before it’s too late," Kagan said.