The departure of
vice chairman may signal that the telecom gearmaker's 16-month CEO search is coming to a close.
Ben Verwaayen, an author of Lucent's latest turnaround strategy, was named chief executive of
Wednesday, becoming the latest in a long list of Lucent executives to depart. While you might think that losing a potential successor to interim chief Henry Schacht would come as a blow to Lucent, people familiar with the situation say quite the contrary.
Apparently, Verwaayen's decision to take the BT job came when he discovered he wasn't the board of directors' choice for the top Lucent job. In fact, says one former Lucent executive, Verwaayen was an ineffectual leader who failed in his primary duty to spur international sales and was pushed into a noncore job to "get him out of the way."
Verwaayen was unavailable for comment Wednesday. Lucent's Schacht said in a press statement that the company would "miss Ben's leadership, insights and exceptional business management skills." Lucent fell 8 cents, to $7.33.
Though Lucent and a representative from the company's executive search firm Spencer Stuart declined to comment on the progress of the hunt, one Lucent source said a choice could be announced in the next few months.
To be sure, say industry observers, Verwaayen's decision to take the $1 million-per-year BT job is far from a consolation prize. The U.K. phone giant, despite its own missteps and dilutive acquisition spree, is still considered one of telecom's global superpowers. And with Verwaayen in charge, Lucent's sales reps may be guaranteed a round of introductions.
High-ranking defections and firings have been among Lucent's more public stumblings in its two-year decline from the world's top networking equipment maker to just another tech shop battling insolvency. While Schacht has done his best to hold the business together and help chart a turnaround for the company, his unintentionally long tenure makes replacing him even more difficult.
"The more you set your stamp on the company, the harder it is for the next person to make their mark," says CIBC World Markets analyst Steve Kamman, who rates Lucent hold. CIBC has no underwriting ties to Lucent.
Join the Club
Industry sources offer few names as potential Lucent CEO candidates. This suggests either a dearth of marquee talent with interest in the job, or a process that is deeply under wraps.
Seen as a crony of Rich McGinn, the previous CEO who was sent packing with a $10 million
parting agreement, Verwaayen was hired in 1997 to juice up Lucent's international sales. But as head of global sales, it seems Verwaayen may have been a little too generous with financing terms, rendering some of the deals unprofitable at best and possibly a liability to Lucent at worst, says the former executive, who asked not to be named.
Lucent is still trying to dig itself out of its vendor financing hole, which was as deep as $8 billion in outstanding commitments a little over a year ago. Lucent says Verwaayen had a big role in financing decisions, but that those decisions required approvals from more than one person or group of people.
Perhaps to Verwaayen's credit, Schacht credited the executive with helping Lucent form its new strategy to focus exclusively on 30 to 50 core customers, and avoid the less profitable accounts.
At least that's how some at Lucent chose to look at it. Others now outside the fold are less diplomatic.
"All in all," says the former Lucent exec, "I would say that Lucent is getting rid of a loser, and BT is picking up an empty suit."