Alcatel-Lucent’s New CEO and Chairman to Tackle Big Challenges

| Sep 3, 2008 | Telecom Infrastructure | Flash Analysis

| Analysts: Peter Jarich, Ron Westfall

Event Summary

September 2, 2008 – Alcatel-Lucent’s Board of Directors approved the appointment of Philippe Camus as the company’s non-executive Chairman as of October 1st, 2008. Ben Verwaayen is appointed as the company’s chief executive officer. Mr. Verwaayen will also join the company’s Board of Directors.

Philippe Camus, 60, is a French national and a US resident. He is a seasoned business leader whose international experience spans several industries. He was the co-CEO at European Aeronautic Defense and Space Company (EADS) and managed a large, global business in the high-tech industry. He is co-Managing Partner of Lagardère, an international media group, and a partner of Evercore Partners, a New York based investment and advisory firm.

Analytical Summary

• Current Perspective: Positive on Alcatel-Lucent’s appointment of Philippe Camus as the new Chairman of the Board of Directors and Ben Verwaayen as the new CEO to replace Non-Executive Chairman Serge Tchuruk and Pat Russo, respectively, because the new appointments prove that Alcatel-Lucent can recruit arguably the best options available for these positions and significantly improve the odds of moving the company forward. The new CEO and Chairman of the Board of Directors create an opportunity for Alcatel-Lucent to recast the company’s image, overall corporate direction and finances, separating the company from the some of the immediate post-merger frustrations including disappointing financial results and trans-Atlantic culture clashes. In particular, the appointment of Ben Verwaayen as the new CEO should go a long way in assuaging concerns among Alcatel-Lucent’s employees, customers and partners in Alcatel-Lucent’s mid to long-term ability to improve the company’s overall fortunes, including better meeting the challenges of global competition and reinvigorating its financial performance. Of course, Ben Verwaayen’s previous stints at Lucent and KPN as well as his encouraging performance as CEO of BT bodes well for the prospect of Alcatel-Lucent becoming a more formidable competitor in the foreseeable future.

• Vendor Importance: Very high to Alcatel-Lucent, because the company needed to fill the CEO and Chairman of the Board of Directors positions rapidly in order to avoid the distractions inherent in speculation about pending new appointments to the positions. A prolonged and speculative selection process could have generated unnecessary distractions for the company, demoralizing employees while producing new sales and marketing fodder for rivals and additional consternation from financial markets. The selection of Ben Verwaayen – a Dutch national, neither American nor French – as the CEO especially drives home the idea that Alcatel-Lucent is fully committed to a post-merger, unified identity for the company moving forward.

• Market Impact: Moderate on the telecom and enterprise infrastructure markets because Alcatel-Lucent had to, inevitably, fill the CEO and Chairman of the Board of Directors slots. Yet, both selections argue that Alcatel-Lucent opted for prudent and well received consensual picks in Philippe Camus and Ben Verwaayen, so telecom infrastructure rivals will prove hard pressed to derive much sales and marketing mileage from characterizing any potential upheaval in the upper management ranks as a major liability for Alcatel-Lucent over the mid- to long-term. In the short-term, however, rivals will reasonably assert that some turmoil will accompany the ascension of a new CEO and as a result Alcatel-Lucent will likely need to adapt to transitional adjustments in areas such as overall corporate organization modifications, potential new management appointments and executing on the CEO’s new game plan. This includes the ability of Alcatel-Lucent’s management team to sustain and expand gains in areas such as GSM/CDMA, professional services, the IP services edge, and the enterprise segments, while revitalizing the company’s prospects in areas such as fixed access and CDMA2000.

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