27th Jun 2013

Can Michel Combes rise to the challenge at Alcatel-Lucent?

In April Michel Combes took over as CEO of Alcatel-Lucent. In anticipation of his plans for a much-needed overhaul, stocks jumped 34%. Hopes are high - yet the company’s financial position still remains weak.

Alcatel-Lucent is a mobile phone manufacturer and telecommunications equipment company with operations in over 130 countries worldwide. The company has a research and development organisation, Bell Labs, which holds over 29,000 patents, and the employees of which have been awarded 7 Nobel Prizes. Yet, Alcatel-Lucent has been losing money since Alcatel’s merger with Lucent Technologies in 2006.

Last week Combes announced a new strategy to aid the flailing company climb out of the rut of financial instability. Cost cutting, asset sales and restructuring of debt are on the cards. The Shift Plan - as it is called - is a detailed three year plan to reposition the company within the telecommunications industry. Combes said in a statement, "Today we are taking comprehensive action to position Alcatel-Lucent at the heart of the digital ecosystem." Combes has set a target of increasing the profit margin by five times to 12.5 % of sales in 2015.

Michel Combes has over 20 years experience in the telecomms industry, and he has held chief executive roles in a number of organisations, namely Vodafone (Europe), GlobeCast, Assystem-Brime and TDF Group. Philippe Camus, chairman of the board acknowledged Combes’s “deep knowledge of the industry as well as his experience of major business and financial transformation at a worldwide level”. Combes has the experience and the capabilities to turn Alcatel-Lucent around, but will he do it?

Though Alcatel-Lucent has been failing to generate regular profits, the company is not without promise. With one of the most valuable patent portfolios in the world Alcatel-Lucent has potential, and the opportunity for growth – with the right guidance.

Cutting expenses and restructuring debt however, is not enough. One of the major obstacles to the company’s profitability so far has been the over-diversification of the business. Combes’s new strategy addresses this weakness and outlines a plan for specialisation. And so I am hopeful in his ability to transform Alcatel-Lucent.

Combes is now nearing the end of his first 100 days, which is an opportune time for reflection and review. He may not have achieved all his aims in this time, but it is important to record achievements and capture lessons learned along the way. It is also time to plan the ‘Second Act’. Combes is ideally placed now to look forward and plan for the next big milestone – the end of the first 12 months in the role.

Hilda Goold

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