Still looking for a plan

31 October 2007 By Pierre Briancon

The latest turnaround plan for the troubled FrancoAmerican telecoms group isn’t radical enough. Nor is its strategic thinking clear. That’s partly because CEO Pat Russo has to deal with a 24member board and a chairman who reportedly meddles.

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AlcatelLucent, the FrenchUS telecom equipment maker, said on Wednesday that its net loss in the third quarter amounted to E258m, worse than analysts expected even after the company posted another profitwarning in September. Alcatel barely broke even on an operating basis in the quarter, with operating profit at E70m vs E430m a year ago.

The company also said it would strengthen its turnaround plan, which would lead to E400m of savings on top of those that had already been decided. Synergies from last year's merger between Alcatel and Lucent will amount to E2.1bn in 2009. 4,000 job cuts will be added to the 12,500 already announced.

AlcatelLucent also said it would streamline its management structure with a management committee reduced to seven members reporting directly to chief executive Pat Russo. The company also said that Chief financial officer JeanPascal Beaufret will be replaced by current enterprise group head Hubert de Pesquidoux.

Shares of Alcatel rose 3% in early trading on Wednesday but ended the day flat after Pat Russo's conference call with analysts, giving the company a E15.3bn market capitalisation. The stock is down 39% this year.

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