ALU CEO to step down, Ovum pooh-poohs NSN merger

BANGALORE, INDIA: Alcatel-Lucent CEO, Ben Verwaayen will step down from his position once a successful transition is in place, the company said in a statement.

Philippe Camus, chairman, Alcatel-Lucent Board, said "After due reflection, the Board has accepted Ben's decision to step down as CEO. Over the last few years, Ben has set a new direction, created one company out of two, and has recently seen through the completion of the stabilisation of the company's balance sheet, enabling us to move forward with confidence."

"The Board wishes to record its thanks to Ben, and will take full advantage of him remaining in the role as CEO whilst the Board runs a full and independent process to find a successor, looking at both internal and external candidates," he added.

Ben Verwaayen said, "Alcatel-Lucent has been an enormous part of my life. It was therefore a difficult decision to not seek a further term, but it was clear to me that now is an appropriate moment for the Board to seek fresh leadership to take the company forward. I have therefore informed the Board that I will not seek re-election at the Annual General Meeting, and I will work with them openly and fully as they complete a succession process."

Ben expressed hope that the recent refinancing and implementation of restructuring plan will put the company on a secure footing.

On the other hand, as rumours of a potential merger between Alcatel-Lucent and Nokia Siemens Networks are doing rounds, analyst firm Ovum opines that to merge two companies that have yet to make their previous mergers work would be a step backwards for both the parties and makes little sense.

Tony Cripps, principal analyst, Infrastructure, Ovum, said: "A merger of Alcatel-Lucent and Nokia Siemens Networks makes little sense. Both companies are still struggling to make the mergers that created their current selves work. That would be the merger of Alcatel with Lucent and Nokia Networks with Siemens. To now merge two companies that have yet to make their previous mergers work would be a step backwards for both parties. This is especially true for NSN which appears to be finally getting its post merger self in order. The challenges facing this rumoured merger would be immense."

He pointed out that one of the biggest challenges would be rationalizing the two companies overlapping product portfolios in wireless infrastructure.

"This is no small task as wireless revenues accounted for approximately 24 per cent of ALU revenues in 2012 (14.4 billion Euros) and at least 40 per cent of NSN's revenues (13.8 billion Euros). The Alcatel Lucent merger struggled with portfolio rationalization. There is no reason to believe that an ALU NSN merger wouldn't have the same problem. ALU and NSN would also need to rationalize overlapping operator support services as well. All this rationalization of course leads to more layoffs, something that both companies are very familiar with lately, and can be a major distraction. But, mergers as a whole can be distractions and that is something neither of these companies can afford at this time," he added.