Telecoms equipment maker Alcatel-Lucent today ditched its chairman and chief executive as it tries to galvanise a still-fragile merger following a series of profit warnings and falling market share.
Chief executive Pat Russo will leave before the end of the year while Serge Tchuruk, the architect of the 2006 merger, will leave on October 1st.
The move comes weeks after shareholders heaped criticism on top directors following a string of profit warnings and a collapsing share price, and approved measures that would make it easier to oust them. The firm also reported a deep second quarter loss, stemming from the Lucent inheritance.
The group was created when Paris-based Alcatel bought Lucent of the United States. But it had trouble competing with cheaper Asian rivals which learnt fast how to provide high quality voice over internet and mobile communications.
Alcatel-Lucent shares rose as much as 6 per cent, after a 23 per cent decline this year and a 55 per cent fall in 2007. By 9.46am the stock was up 4.4 per cent at €4.
"These departures are not a total surprise," said Exane analyst Alexander Peterc. "It is a good thing that the company can now move forward and put behind it the differences between the Lucent parts and Alcatel side," he added.
Henry Schacht, a former Lucent chief executive until Russo took his job in 2002, will immediately resign from the board.
Alcatel-Lucent said both Mr Tchuruk and Ms Russo had decided themselves to quit. It said the board would look for a new non-executive Chairman and CEO immediately.
"The Board is also initiating a process to change the composition of the Board to a smaller group that will include new members," it added.
Ms Russo stands to receive up to €6 million in compensation while Mr Tchuruk received €5.6 million when he gave up the CEO role to Russo in 2006.
Alcatel-Lucent ported underlying April-June sales and profits today which came in slightly ahead of expectations, but reported a major net loss for the quarter due to writedowns.
The group reported adjusted operating profit of €93 million ($146.5 million) for April-June against a loss of €19 million in the same period last year.
Analysts expected the company to report operating profit of €64 million.
Alcatel-Lucent's April-June net result fell to a loss of €1.1 billion, hurt by an €810 million writedown from its CDMA operations.