Alcatel-Lucent nears CEO pick

August 26, 2008, 5:22 PM UTC

By Scott Moritz

A year after jumping ship, former Alcatel-Lucent president Mike Quigley may be returning to take the top job at the telecom gearmaker.

Quigley, who was an early architect of the Alcatel-Lucent (ALU) merger and later ousted under CEO Pat Russo’s term, has been picked by the company’s nomination committee to replace Russo, according to a Reuters report. The company declined to comment.

In July, after Alcatel-Lucent posted its sixth quarterly loss in two years, Russo and chairman Serge Tchuruk announced they were leaving later this year.

Under Russo and Tchuruk, the company struggled to integrate Lucent’s products and operations, based in New Jersey, with Alcatel’s Europe-based business, headquartered in Paris. In the nearly two years since the merger, sales have fallen 7.3% and the stock is down 55% as the company announced round after round of layoffs.

Heightened competition from outfits like Ericsson (ERIC) and China’s Huawei, along with networking equipment spending cuts by phone companies and a sluggish economy in the United States and Europe have squeezed Alcatel-Lucent’s performance. But some analysts see a big part of the company’s problem as a lack of focus and an inability to move in the same direction that its customers were headed.

“This is a great move,” said Telecom Pragmatics analyst Sam Greenholtz. He says Quigley had butted heads with Tchuruk and likely has a better feel for the products that telcos, the bulk of Alcatel-Lucent’s customers, are looking for.

As Alcatel-Lucent’s CEO, Quigley’s first job would be to finally integrate Lucent and Alcatel’s operations, says Greenholtz. “They have to get this merger done, and I think Mike will make some hard decisions that Serge and Russo couldn’t make,” Greenholtz said.

Alcatel-Lucent shares surged 5% Tuesday on word of Quigley’s possible appointment.