Nortel management overhaul may leave Lucent envious

The ongoing overhaul of Nortel Networks' corporate management staff at the hands of its new chief executive may spark envy among employees and investors at the company's rival, Lucent Technologies.

In a recent survey of Lucent employees conducted by Vault, a New York research firm, optimism was in short supply, and one Lucent system engineer complained, "Much of the management lacks business degrees; a lot of them were promoted via AT&T days."

By Telephony's count, well over half of Lucent's top management (12 out of 21 presidents, vice presidents and officers) are former AT&T or Bell Labs employees. Well under half (9 of 21) have MBAs or advanced business or management degrees.

By comparison, about half of Nortel Networks' top management are longtime employees. And more than half (nine or 10 out of 16) have MBAs or advanced business degrees. That tally includes Nortel's two most recent hires, Don McKenna and Dennis Carey, both of whom, like new CEO Mike Zafirovski, are former GE executives.

Lucent's recent projection of flat revenue for the next fiscal year may invite further scrutiny of its management team, especially as Nortel brings more new blood into its top ranks and vows to transform its business practices.

"Investors may welcome some outside injection into the management team at Lucent," said RBC Capital analyst Mark Sue. "It's an ultracompetitive industry, and carrying around excess baggage does not always help. Lucent has historically been technology-driven versus market-driven, and some of management's decisions have not always been optimal."

However, MBAs are not solely indicative of management ability and talent, Sue added. (For example, Zafivovski's only non-honorary academic degree is a bachelor's in mathematics.)

"I wouldn't totally correlate MBAs with business momentum and strategic thinking," Sue said. "Some engineers have very good business sense, and some corporate leaders don't even have advanced degrees. Having said that, there is something to be said for new thinking, strong decision-making and fresh ideas, particularly in organizations where corporate strategy and focus have become very staid."