Alcatel-Lucent Chairman, CEO Step Down Amid Widening Losses

The executive shifts come as Alcatel-Lucent, the world's largest fixed and mobile telecom equipment manufacturer, reported its sixth consecutive quarter of losses.

Non-executive chairman Serge Tchuruk has decided to step down on October 1, and CEO Pat Russo will vacate her post "no later than the end of the year," according to a statement from Alcatel-Lucent, Paris. At the board's request, Russo will continue to run the company until a new CEO is in place "to effect a smooth transition and maintain the continuity of the company's business," according to the statement.

Alcatel-Lucent's board will begin searching for a new non-executive chairman and a new CEO immediately. The board is also starting a process to change its composition to a smaller group that will include new members.

Alcatel acquired Lucent Technologies Inc. in a 2006 in a deal worth more than $11 billion. Lucent was a successor to ATandT's equipment-making division. Currently, Alcatel-Lucent is in the middle of a cost restructuring initiative that it expects will result in cutting more than 16,000 jobs. Tchuruk and Russo architected the merger.

Tchuruk ran Alcatel as chairman and CEO before the merger, after which he took the top non-executive spot on the board. Russo took the top executive spot at Lucent in 2002, and retained the chief executive post for the combined company.

"The merger phase is now behind us," Tchuruk said in the statement. "I am proud that Alcatel-Lucent has become a world leader in a technology which is transforming our society. It is now time that the company acquires a personality of its own, independent from its two predecessors. The board must also evolve and the chairman should give the first example, which I have decided to do."

Russo also praised the progress Alcatel-Lucent has made since the merger, noting that market factors made that transition challenging.

"Our strategy is taking hold and our results are demonstrating good operational progress," Russo said in the statement. "That said, I believe it is the right time for me to step down. The company will benefit from new leadership aligned with a newly composed board to bring a fresh and independent perspective that will take Alcatel-Lucent to its next level of growth and development in a rapidly changing global market. I have every desire to ensure a smooth transition of leadership within the company and I have informed the board of my determination to work closely with them until the end of the year or sooner if a successor is named, and we are in agreement on this approach. I have great confidence in Alcatel-Lucent and believe this to be a company with tremendous potential."

Along with Tchuruk and Russo stepping down, former Lucent Technologies CEO Henry Schacht also announced that he will resign from the board immediately, noting that as a former CEO he should not remain beyond the transitional stage of the merger.

Alcatel-Lucent reported its second quarter results on Tuesday and suffered a net loss of roughly $1.73 billion. The company reported second quarter revenue of $6.5 billion, down 5.2 percent from $6.8 billion last year. The company also predicted that sales will stagnate or drop slightly in the third quarter.