Acting swiftly after assessing its recent execution and focus as
unsatisfactory this past weekend, Lucent Technologies Inc. Monday ousted
Chairman and Chief Executive Officer Richard McGinn and put Henry Schacht
temporarily in his place.
The move comes at a critical time for Lucent, which many analysts have said
needed a management shakeup to proceed successfully.
Schacht is no stranger to the part — he had held the role at the company
from 1995 to 1997. He will work with Lucent’s senior
executives to manage the firm and is initiating a search for his successor.
Lucent has also suspended its search for a chief operating officer in light
of this development.
Lucent’s board of directors reviewed the firm’s recent performance and
outlook for the current quarter and realized that a change was necessary.
The company said that it expects pro forma revenue from continuing
operations for the current quarter to decline about 7 percent and pro forma
earnings per share from continuing operations to break even.
Lucent’s troubles lie in adjusting to the evolving industry. The top
telecommunications maker missed the boat sailing toward high-speed
fiber-optic products and away from traditional telephone-switch networks.
When it finally jumped on the optical boom, Nortel Networks and Cisco
Systems had already plunged ahead.
Furthermore, when Lucent did try to launch its own optical product line, it
was unable to manufacture the products fast enough to keep up with customer
demand. Consequently, the firm lost orders to its rivals.
Lucent will also be moving up the release of its fourth fiscal quarter 2000
results, previously scheduled for tomorrow morning, to after the market
Franklin Thomas, Lucent’s senior director, said the decision was a difficult
one because McGinn had made significant contributions to the growth in the
company. However, he said, McGinn’s skill set would not suffice for taking
Lucent into the future.
The company confirmed that it would move ahead with plans to spin off the
microelectronics business and sell its power systems business.
After the market closed Monday, Lucent said pro forma earnings per share from continuing operations for the quarter were 18 cents a share, or $600 million,
down from 24 cents a share, or $768 million, a year ago.
Deborah Hopkins, Lucent’s chief financial officer, said her firm plans to exact a number of changes in the next year. These initiatives include an
intense review of Lucent’s product portfolio to align resources against the highest value opportunities.
Additionally, the Lucent want to consolidate its corporate infrastructure, re-deploy the
company’s marketing and sales resources to align them with the highest growth opportunities, improve supply
chain management and implement a new customer ordering system.
stock closed down 2.59 percent to $22.06. For the year, the stock is down more than 75 percent from its high