Friday, August 01, 2008

My Prediction On Lucent-Alcatel Comes True

Last October, I commented on then-current Wall Street Journal pieces warning of Lucent-Alcatel's struggles, and CEO Pat Russo's probable departure. Earlier, I had written posts here and here about the folly of Lucent's actions under Russo, including the merger.

I wrote, in part,

"Given the sub-par performance of both companies, doesn't it make you wonder why so much air time and/or ink is being spent on this combination? And why nobody seems to be asking how Pat Russo, based upon her dismal track record running Lucent, could possibly take the combined firm somewhere, performance-wise, neither company has ever been before?"

It took two years, but the board of the merged firm finally realized what I, and others, saw much earlier.

As the nearby Yahoo-sourced chart depicts, Russo's Alcatel-Lucent has failed miserably since the 'merger.' It has lost more than 40% of its market value, while the S&P500 has remained flat.

Russo, as quoted in the Journal article, alleged,

"Last year was really tough, but since we put in place the turnaround plan in the fall, we've made concrete, positive progress."

Maybe she should try to tell her shareholders that. The company's share price continued to plummet in the fall of last year, into this spring. It briefly rose, but has cratered once more.

For this abject managerial failure, Ms. Russo will receive parting gifts of "as much as" $9.4MM.


No comments: