Cindy Christy

Cindy Christy, chief operating officer of Lucent Technologies' wireless networks group, knows her employees don't show up to work every day whistling Dixie.

It's difficult to motivate workers when they fear they could lose their jobs any day. Lucent's overall goal is to slice operating expenses by $2 billion a year to return the company to profitability. This includes layoffs of 10,000 workers, with the majority eliminated by July.

Yet Lucent management is driving its people hard, hoping that the plans the company has implemented for a quick turnaround will pay off — and that employees ultimately will be pleased.

“The true test of leadership is leading during a difficult time and getting people focused,” says Christy. “If we stay focused, at the end of the day we'll continue to lead and grow in the telecom sector.”

While the problems plaguing Lucent have centered on other divisions within the company, such as its optical networking and circuit-switched businesses, wireless continues to grow. “If I look at customers like Verizon, Sprint and AT&T and the way they are making investments, there is a healthy indicator that there is a lot of growth potential,” says Christy.

Yet the troubling times have forced Lucent to carefully examine its wireless product portfolios and where it is investing its money. That means moving away from markets that aren't profitable, such as fixed wireless, and focusing on a few areas that are guaranteed to become huge growth areas in the future.

“Historically, we've tried to be all things to all people,” says Christy. “What we want now is to be the leader in providing the most advanced wireless services, and at the same time make money. We're sensitive to what the economy can do, but we have a more laser focus on where we're investing. It reminds us to be focused on making decisions carefully.”

Heavy investments will go into next-generation mobile wireless networks and the wireless Internet, says Christy. The fixed wireless market hasn't met the tremendous expectations that were predicted a few years ago. Winstar Communications has filed for bankruptcy and sued Lucent, claiming the manufacturer failed to honor vendor-financing commitments, and AT&T Wireless Services has scaled back deployments of Project Angel. Lucent says it will honor its current vendor commitments but won't pursue the market any further.

Today's focus is on elements that will help Lucent's customers increase average revenue per customer, reduce capital and operating expenses, and increase revenue for wireless Internet applications. A universal IP backbone is central to that goal because it promises to revolutionize the economics of the entire wireless industry.

“We're moving to one platform for all technologies — one common base station across GSM, TDMA and CDMA, one IP core across all wireless systems and one management solution — so that when wireless utopia actually gets here, we are able to leverage all those assets and not have multiple solutions,” Christy says.

Lucent's aim is also to leverage all of Lucent's corporate assets to drive efficiency within the company.

By the beginning of next year, GSM and CDMA air interfaces will have the capability to exceed data speeds of 50 kb/s, allowing carriers to effectively compete with ADSL and other embedded wireline applications, Christy says. “If you told me I could sit out by my pool getting my e-mail, guess what I'm willing to do?”

Lucent is a major supplier of CDMA equipment and got a big boost from Verizon Wireless earlier this year when it won a two-year, $5 billion contract for 1XRTT cdma2000 equipment. Lucent's position in GSM is much weaker, but Christy believes that is improving. Excluding business in Saudi Arabia, the GSM business has doubled this year. Late last year, Lucent won a chunk of the GSM/general packet radio service business for AT&T Wireless' new buildout and is working on converging GSM and TDMA assets.

And the weakness in GSM has translated to third-generation universal mobile telecommunications service (UMTS) networks. Contracts have been few in Europe, excepting some notable wins with KPN Mobile and a European consortium involving Telefonica.

“We're maintaining a focus on UMTS, and we never anticipated any true revenue stream this year,” says Christy. “We're working harder and we're much more competitive. We're still growing in a way that is more linear than exponential. Offsetting that with technology improvements will keep us in the game.”