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Follow UsBen Klayman
CHICAGO: The collapse of Alcatel's purchase last month of Lucent Technologies
Inc. has not stopped Alcatel Chief Operating Officer Krish Prabhu's ascent as
one of the telecommunications industry's hottest stars.
Prabhu, 46, is among a handful of candidates who could be tapped to lead
Lucent or Nortel Networks Corp., industry observers said. It remains to be seen
if Prabhu, an engineer who has risen to the big leagues of the telecom industry,
would have what it takes to turn around a Lucent or a Nortel - both equipment
giants have struggled with slowing demand that has forced drastic job cuts. But
he does have fans on Wall Street.
"He's the one person on the Alcatel side that Wall Street actually
likes, Wall Street gets along with," one analyst, who asked not to be
identified, said of the Indian-born American executive. "We thought he
maybe would be the guy that would leave and become chief executive of Lucent or
Nortel."
Alcatel's failed takeover of Lucent meant Prabhu lost the chance to run
Lucent's Bell Labs, where he launched his career as an engineer in 1980. While
he would not comment for this story, interviews with industry officials,
analysts, mutual fund managers and friends paint a picture of a driven,
charismatic executive - even if it remains to be seen if he is picked to run a
telecom equipment firm.
Born in South India, Prabhu came to the United States in 1975 after earning a
master's degree in physics from the Indian Institute of Technology in Bombay. He
then earned Master's and doctoral degrees in electrical engineering from the
University of Pittsburgh and in 1980 he was hired at Bell Labs, then part of
long-distance telephone giant AT&T Corp. He joined Rockwell in Dallas in
1984.
'Not your figurehead leader'
Described as driven yet friendly, Prabhu joined Alcatel in 1991, when the
French telecom equipment firm bought the Rockwell unit where he worked. He has
held Alcatel's top spot in the United States since 1997, and in 1999 was named
COO.
"He's not relying on others to tell him what to say," said Ken
Wigglesworth, a venture capitalist who was chief financial officer of Newbridge
Networks, which Alcatel bought last year for $7.1 billion. "He's not your
figurehead leader." Prabhu also isn't one to feel lost in the research
labs.
"He has an amazing ability to cross technology boundaries, from the most
theoretical optical networking stuff to make a buck with that in the
field," said Bill Osborne, ean of the University of Texas at Dallas
engineering and computer science school, where Prabhu taught part time in the
late 1980s.
On the other hand, Prabhu can move freely between the lab and Wall Street,
said Paul Pandian, who worked with Prabhu at Rockwell and has known him almost
20 years. "He started out as a pure and simple engineer, but very soon he
became a businessman as well. That kind of a transition, very few people have
made successfully," said Pandian, now CEO of Dallas-based telecom software
company.
However, questions remain about his experience. "He knows the technology.
He's quite dynamic himself, but whether he's quite got what it takes to run a
whole company, I'm not sure," said Susan Anthony, an analyst with Credit
Lyonnais in London. She nevertheless credits Prabhu for helping to change
attitudes at Alcatel, a former conglomerate that over the last several years has
transformed itself under CEO Serge Tchuruk's leadership into a leading
communications equipment firm.
Notwithstanding the collapse of the $23 billion merger with Lucent, Prabhu
also is credited with implementing Alcatel's aggressive North American expansion
the last several years. Since September 1998, Alcatel has spent more than $15
billion acquiring eight North American firms.
Devoted family man
Business alone doesn't drive Prabhu, who is devoted to his wife and three
children, friends said. He has remained in Dallas to allow his children to
finish high school in America. His family already has lived overseas once.
Prabhu was president of Alcatel's Belgium-based broadband products business from
1995 to 1997, when the company launched its digital subscriber line division.
While he doesn't speak French, Prabhu recently told Fortune magazine
he would welcome the opportunity to run Alcatel, and company insiders credit him
with bridging the American-French relationship quite nicely. Prabhu's experience
puts him at the top of the list for any company searching for a new leader,
industry officials said. Lucent and Nortel are likely eyeing many of the same
candidates, said Scott Scanlon, chairman and CEO Hunt-Scanlon Advisors, a
Stamford, Connecticut-based market research firm that tracks executive
recruiting.
Picture perfect
"When I look at both of these assignments, the No 1 item at the top of
the agenda for the incoming CEO is that this is obviously a turnaround
situation. He seems to fit the bill," Scanlon said of the prospects of
Prabhu leading either Lucent or Nortel. Both firms have been tight-lipped about
their searches.
The delay in finding a replacement for Lucent CEO Henry Schacht, who came
back to lead Lucent after his protege, Rich McGinn, was forced out last October,
suggests some candidates have been scared off by Lucent's problems, Merrill
Lynch analyst Michael Ching said.
"Is this a new challenge for Jack Welch?" he said, suggesting the
turnaround at Lucent will require an executive as talented as General Electric's
storied CEO. "The depth of the problems are pretty severe." Nortel has
insisted it will consider both internal and external candidates to replace
retiring CEO John Roth. However, analysts said the world's largest telecom gear
maker, which recently predicted a staggering $19.2 billion second-quarter loss,
needs an outsider at the helm.
Other potential candidates at Nortel include former Nortel CFO Peter Currie,
former Nortel president and former Bay Networks CEO, David House and Don Listwin,
who left Cisco Systems Inc. where he was seen as potential successor, to head up
software maker Openwave Systems Inc.
(C) Reuters Limited 2001.