Alcatel-Lucent’s Russo falls on sword

After announcing a five per cent dip in second quarter revenues and a sixth straight quarterly loss, telecoms vendor Alcatel-Lucent has ended months of speculation by confirming the imminent departures of its chief executive and chairman.

Chief executive Pat Russo - whom Forbes ranked as the tenth most powerful woman in the world in 2007 - will depart before the end of the year, once her replacement is found. Non-executive chairman Serge Tchuruk will leave his post on 1 October.

The search for their successors will now get underway and the company also announced a plan to reduce the size of its board of directors over time. The first casualty is former Lucent Technologies chief Henry Schacht, who has resigned from the board, claiming it was inappropriate to remain past the transitional stages of the merger.

Tchuruk said: "The merger phase is now behind us. I am proud that Alcatel-Lucent has become a world leader in a technology which is transforming our society. It is now time that the company acquires a personality of its own, independent from its two predecessors. The board must also evolve and the chairman should give the first example, which I have decided to do."

Russo added: "I am very pleased with the progress we are making especially in light of a difficult market environment. Our strategy is taking hold and our results are demonstrating good operational progress. That said, I believe it is the right time for me to step down. The company will benefit from new leadership aligned with a newly composed Board to bring a fresh and independent perspective that will take Alcatel-Lucent to its next level of growth and development in a rapidly changing global market.

"I have every desire to ensure a smooth transition of leadership within the company and I have informed the Board of my determination to work closely with them until the end of the year or sooner if a successor is named, and we are in agreement on this approach. I have great confidence in Alcatel-Lucent and believe this to be a company with tremendous potential."

The vendor revealed revenue for 2008's second quarter was down 5.2 per cent on the same period last year to €4.101bn, (£3.24bn), while net loss increased to €1.102bn, nearly double what it stood at in Q2 2007.

Russo said: “In our outlook for the second quarter and full year, we were prudent in our view of the telecommunications equipment market due to the macroeconomic environment and the resulting potential for lower capital spending in the US. Over the past three months, the global macroeconomic environment has further deteriorated and the economic slowdown has begun to spread to Europe. Although not evident yet, we believe this could impact somewhat the capital expenditure decisions of certain European customers, especially in fixed access. "