Monday, April 03, 2006
Patricia Russo; To Lead Merged Lucent, Alcatel, $13.4 Billion Telecom Co.
The ANNOTICO Report
Alcatel, the French telecom equipment maker, based in Paris will acquire its smaller U.S. rival, Lucent Technologies Inc. in a $13.4-billion stock swap that would form a major new global player. Called a "merger of equals," Alcatel shareholders would hold about 60% of the new company and Lucent shareholders about 40%. Paris-based Alcatel has more revenue and employees, but Lucent, based in Murray Hill, N.J., is slightly more profitable.
The combined company, whose name is to be decided at a later date, would be led by Patricia Russo, the current chief executive of Lucent. Alcatel Chairman and CEO Serge Tchuruk would become nonexecutive chairman.
Patricia Russo was born in 1953, in Trenton, New Jersey. Education: Georgetown University, BS; Harvard Business School, Advanced Management Program, 1989. Daughter of a physician and homemaker. Growing up as the only girl in a large Italian-American family, she learned to "roll with the boys." That is, she possesses superb communication skills; observers say that her presentations are clear and crisp. Yet, unlike some more affable types, she does not share much of herself with the public.Married; stepchildren: two.
In 2005, Forbes magazine rated Russo as the thirteenth most powerful woman in the world. With her new company 2 1/2 times as large, it should vault her up the ladder.
Los Angeles Times
From
Reuters
April 3, 2006
NEW YORK — Patricia Russo has worked
for years to persuade investors that U.S. telecommunications equipment maker Lucent Technologies Inc. was not a
lost cause.
She took the helm when Lucent was reporting an annual loss in excess of $16
billion, brought the company back to profitability and Sunday struck a deal to
combine with Alcatel of France to form a giant supplier of network gear.
The New Jersey-born Russo, 53, will head to Paris to become chief executive of the new group, which has combined revenue
of about $25 billion, including politically sensitive defense contracts with
the United States and France.
She told analysts during a conference call Sunday that the two companies
"share a common and deep understanding" of their clients' needs,
though Lucent will create a separate unit to oversee the U.S. government contracts.
"There is … a lot more work to be done as integration planning
proceeds," ! Russo said. "But this is a compelling set of synergies
that are tangible and have been mutually identified and agreed to."
The 25-year telecom industry veteran studied French in high school but does not
speak the language now, a spokesman for Murray Hill, N.J.-based Lucent said. Russo
has no plans to brush up on her French, because Alcatel's business language is
English, he said.
Russo helped launch Lucent in 1996 after its spinoff from AT&T Corp., which
she joined in 1981 after eight years in sales at IBM Corp. She left to join
Eastman Kodak Co. for a few months before she was drafted back in 2002 to
transform her old employer as it faced devastating challenges in the wake of a U.S. telecom industry meltdown.
With a reputation as a hard worker and a tough negotiator, Russo is not as
flamboyant as some other U.S. technology executives and has
received less newspaper coverage.
Some analysts said Russo tended to get less credit than she was du! e for
turning Lucent around, calling her a manager who knows her own strengths and is
not afraid to delegate.
"She gets forgotten a little bit because she's not as commanding a
presence at an investors conference and she's not all techie…. What she
does is close business," Sanford C. Bernstein & Co. analyst Paul
Sagawa said.
Sagawa, who said Russo's sales background was key to Lucent's contract wins in
the United States and overseas, added: "She
rolls her sleeves up and gets right into it."
When Russo rejoined Lucent, demand for network gear had plummeted because
growth in Web traffic proved slower than expected, disappointing phone
companies that had spent billions of dollars building high-speed networks
during the Internet boom.
Armed with a jar of M&Ms at her desk, Russo pushed through cost cuts that
included nearly halving Lucent's workforce and ditching some products and units
to streamline the company.
When she took over, L! ucent had suffered an annual net loss of $16.2 billion
in fiscal 2001. By fiscal 2005, the company had reported annual profit of $1.19
billion and revenue of $9.44 billion, up 4% from the previous year.
Although critics note that a significant portion of the company's profit came
from contributions from credits related to its pension plan, and that Lucent's
share price had not topped $5 in about four years, many see the company's
survival as no small feat for its CEO. The shares closed Friday at $3.05.
"Lucent was on the brink and she pulled it back," longtime
independent telecommunications analyst Jeff Kagan said. "She's done a
great job of saving the company from the edge. It's still viable. It's still
competitive, but it's a different company. It's smaller, more focused."
http://www.latimes.com/business/
http://www.lucent.com/corpinfo/bios/russo.html Lucent Corp, Patricia Russo Bio
http://www.latimes.com/business/la-fi-alcatel3apr03,1,3925261.story?coll=la-headlines-business
From the Los Angeles Times
The deal would create a telecom equipment maker with annual sales of about $25 billion.
From the
Associated Press
April 3, 2006
PARIS — Alcatel and Lucent Technologies Inc. said Sunday that the French
telecom equipment maker would acquire its smaller U.S. rival in a $13.4-billion
stock swap that would form a major new global player. About 8,800 jobs would be
cut.
The company, to be based in Paris, would
have annual sales of $25 billion — close to the 2005 revenue posted by
the world's largest network provider, Cisco Systems Inc. of San Jose. The combined Alcatel and Lucent
would generate $1.7 billion of savings within three years, the companies said.
In a move apparently aimed at addressing any U.S. security concerns about Bell
Labs — Lucent's research arm, which does sensitive work for the Pentagon
— the companies said they planned to form an independent American
subsidiary holding contracts with U.S. government agenc! ies.
The unit would be separately managed by a board of three U.S. citizens acceptable to the U.S. government, the companies said.
Alcatel and Lucent, whose combination remains subject to shareholder and
regulatory approval, expect to cut costs by consolidating support functions,
leveraging research and development and services across a larger base and
cutting about 10% of their combined worldwide workforces.
The companies said the deal would allow them to better combat the intense
competition in the telecom equipment market.
"The primary driver of the combination is to generate significant growth
in revenues and earnings based on the market opportunities for next-generation
networks, services and applications," the companies said.
Analysts have said that a tie-up by the two would be a good fit and that the
combined company would be better able to resist pricing pressures from the
larger telecom service providers emerging from a new wave ! of consolidation in
the sector.
The combined company, whose name is to be decided at a later date, would be led
by Patricia Russo, the current chief executive of Lucent, the companies said in
a joint statement. Alcatel Chairman and CEO Serge Tchuruk would become nonexecutive
chairman.
The 14-member board of directors would consist of Russo, Tchuruk, five of the
current directors from each company and two new independent European directors
to be mutually agreed upon, the companies said.
Though the companies called the deal a "merger of equals," under
terms of the transaction Alcatel shareholders would hold about 60% of the new
company and Lucent shareholders about 40%, the companies said. Lucent
shareholders would receive 0.1952 of an Alcatel American depositary share for
each common share they own.
Paris-based Alcatel has more revenue and employees, but Lucent, based in Murray Hill, N.J., is slightly more profitable. The companies did not give
d! etails on where the job cuts would be, but Russo pledged to "take a
fair and balanced approach as we manage our way through this."
The companies appeared to have resolved a standoff over Alcatel's satellite
activities, which Alcatel had planned to transfer to Thales in return for
increasing its stake in the French defense electronics company to about 25%
from the current 10%.
The Thales deal, designed to answer French government concerns over sensitive
military technologies, hit a snag when European Aeronautic Defense & Space
Co. intervened — with the reported backing of French President Jacques
Chirac — to demand that its own Astrium satellite unit be included in the
operation.
But the satellite deal between Alcatel and Thales is now poised to go ahead
without EADS, a person familiar with the talks said.
Alcatel and Lucent said March 23 that they were negotiating to combine.
The deal has been approved by the boards of each company an! d requires
regulatory and governmental reviews in the United States, Europe and elsewhere, as well as the
approval of shareholders of both companies. Lucent and Alcatel said they
expected to complete the deal in six to 12 months.
Alcatel shares closed down 1.5% at 12.77 euros Friday, and Lucent fell 4 cents,
or 1.3%, to $3.05.
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