Lucent fires CEO

As Lucent's profits tumbled again, the company's board of directors fired CEO

Rich McGinn and appointed Henry Schacht, McGinn's predecessor, to reverse the

firm's downward slide. Lucent said profits in the most recent quarter fell to

$600 million from $768 million. Sales rose 15 per cent to $9.4 billion, led by a

61 per cent jump in sales of optical fiber.

Just two weeks ago, McGinn said he had no plans to resign. But on Sunday,

Lucent's board asked him to step down. As part of the deal, Schacht, a member of

Lucent's board of directors, quit as chairman of the newly formed Avaya. Schacht

headed Lucent until 1998 when McGinn was brought in. Investors, analysts and

Lucent board members alike are targeting McGinn for allowing Lucent to lose

valuable market share in the market for voice-based telephone switching

equipment, for being late in developing new voice switches for data networks,

and for falling behind in the exploding field of optical systems.

Schacht's leadership is expected to last only so long as it will take the

company to find a replacement for McGinn. Schacht said he will focus mostly on

daily operations so a new CEO won't have to be too concerned with restructuring

operations. "We intend to turn this company over to the new CEO on a new

track," Schacht said. Schacht said he will proceed with McGinn's plan to spin

off the Lucent Microelectronics semiconductor and fiber-optic components unit,

as well as selling off the Power Systems group which makes power supplies for

communications networks.