Alcatel-Lucent Names Tufano Operating Chief in Revamp

Alcatel-Lucent SA, the phone-equipment supplier whose stock is trading near a 23-year low, appointed Chief Financial Officer Paul Tufano to a newly created role of chief operating officer, giving him additional responsibilities in the French company’s turnaround plan.

Tufano, who will keep the CFO position, will be in charge of global supply chain and procurement as well as the company’s enterprise, strategic industries and submarine businesses, Paris-based Alcatel-Lucent said today. Robert Vrij was named president of global sales and marketing. The changes take effect on Jan. 1.

Chief Executive Officer Ben Verwaayen announced July 26 a reorganization, including the elimination of 5,000 additional jobs, to help save 1.25 billion euros ($1.6 billion) by the end of 2013 and return to profit. European carriers are cutting spending as competition from Asian rivals such as Huawei Technologies Co. and ZTE Corp. has weighed on prices.

“By the CFO taking over operations, Alcatel wants to make sure that they will deliver on cost-cutting, as there is urgency,” Odon de Laporte, an analyst at Credit Agricole Cheuvreux in London, said by phone. “This is a matter of survival.”

Profit Targets

Alcatel-Lucent dropped 0.8 percent to 92.3 euro cents as of 10:00 a.m. in Paris. The stock closed at 82.2 cents on July 26, the lowest price since at least October 1989. It has declined 23 percent this year through Sept. 7.

Created by the 2006 merger of Alcatel SA and Lucent Technologies Inc., Alcatel-Lucent said on July 17 that it won’t meet its goal of improving its full-year adjusted operating-profit margin this year, from the 2011 level of about 3.9 percent. Its shares fell 20 percent on that day.

Alcatel-Lucent posted its first annual net income in six years in 2011. Last quarter, it posted a net loss of 254 million euros. Second-quarter operating loss, adjusted for some items, was 31 million euros, compared with a profit of 87 million a year earlier.

The company today named Stephen Carter president for managed services and executive vice president for corporate restructuring. Philippe Keryer becomes president of networks and platform. Rajeev Singh-Molares will focus on operations in China and its Alcatel-Lucent Shanghai Bell joint venture.

A streamlined executive committee will oversee the “simplified business model,” the company said.

“The management changes and the merger of the CFO and COO position show that the company is taking its restructuring program seriously, cutting costs and getting rid of unnecessary duplications,” said Mirko Maier, an analyst at LBBW in Stuttgart, Germany. “This is a positive sign. Getting costs under control will also help the company to remain independent.”

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