Low-Profile CEO to Lead Merged Lucent, Alcatel

From Reuters

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 due 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, Lucent 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.”