French telecom-equipment giant Alcatel-Lucent SA (ALU: Quote) is expected to announce as early as Thursday that CEO Ben Verwaayen will step down from the position at the company's annual general meeting on May 7, when his contract expires, according to media reports on Wednesday. He will use the time to help in a smooth transition as an when a replacement is found. Reports state that the decision to step down was mutually agreed at a board meeting.
Paris-based Alcatel-Lucent is also scheduled to report financial results for the fourth quarter and full-year 2012 on Thursday. The announcement on Verwaayen's departure is expected to be made along with the results.
Verwaayen took over as the CEO of Alcatel-Lucent in September 2008, succeeding Patricia Russo, and promised to turnaround the beleaguered telecommunications equipment maker. However, there has lately been disgruntlement among some directors on the slow progress in turning around the company.
However, the directors reportedly maintain that Verwaayen has managed to stabilize the company, but has not been able to drive to company to report consistent profit across its businesses amid cutthroat competition, particularly in Europe.
Alcatel-Lucent has been reporting weak earnings results for the recent quarters due to weak wireless segment revenues. The leader in 3G for CDMA is trying to cope up with rapid customer migration from CDMA to 4G LTE services, particularly in North America, and also grappling with continued market uncertainties in Europe.
In order to offset weak earnings results, Alcatel-Lucent implemented a restructuring plan that includes job cuts and cost savings. In early November, Alcatel-Lucent reported a loss for the third quarter, as revenues continued to be impacted amid challenging economic conditions, especially in Europe.
At that time, Alcatel-Lucent said its 1.25 billion euros restructuring program, called the Performance Program, was underway with 450 million euros in savings achieved. The company also raised its job cuts forecast to 5,500 employee positions. The company is also reportedly exploring sales of assets to strengthen its balance sheet.
Meanwhile, Alcatel-Lucent had reported in February 2012 its first annual profit in six years after France's Alcatel SA and U.S.-based Lucent Technologies merged in 2006 to create a telecom-equipment giant.
Verwaayen, a Dutch national, was earlier working at Lucent until the merger and was most recently the vice chairman of the management board when he left and joined BT Group. He served at Lucent since September 1997, and held positions such as executive vice-president and chief operating officer, as well as executive vice-president, International during his nine year tenure there.
Verwaayen joined BT group from Lucent and was appointed to the Board of Directors of BT in January 2002 and became Chief Executive in February 2002. He left BT Group in June 2008 as Chairman of the Board's Operating Committee and returned to the merged Alcatel-Lucent as its CEO in 2008.
Prior to joining Lucent, Verwaayen worked for KPN in the Netherlands for nine years as president and managing director of its subsidiary PTT Telecom. From 1975 to 1988, he worked at ITT in Europe.
ALU closed Wednesday's regular trading session at $1.71, down $0.01 or 0.58% on a volume of 16.85 million shares.
by RTT Staff Writer
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