Alcatel-Lucent Chops Away at Years of Failure

When Adolfo Hernandez joined Alcatel-Lucent (ALU) in late 2008, the networking-equipment maker was almost comically dysfunctional. In one of his first meetings as president of Europe, Africa, and the Middle East, a customer started screaming at him before he even got to his chair. At an all-hands gathering at an Eastern Europe facility, employees threw fruit and vegetables at executives announcing another round of restructuring. "The whistling was so loud that they couldn't hear themselves speak," Hernandez says. More than one of his new colleagues asked him why anyone in their right mind would take a job at such a screwed-up company.

Less than three years later—and after a decade of losses, downsizing, and one very large, messy merger—Alcatel-Lucent has become one of the most startling turnarounds in tech. The Paris-based company is gaining share in markets such as routers and superfast 4G networks, where it has won billion-dollar contracts with Verizon Wireless and Sprint Nextel (S). Telecom executives are buzzing about a new Rubik's Cube-sized gizmo called lightRadio that can extend wireless coverage without need of massive, energy-hogging cell towers. The stock has jumped 117 percent this year, to $6.40.