Alcatel-Lucent’s new CEO vows big overhaul

Alcatel-Lucent’s new chief executive officer promised sweeping changes today during his first quarterly earnings call at the helm of the struggling megavendor. Though precise details were few, Ben Verwaayen, now two months on the job, promised a more thorough explanation of the company’s future strategy in early December.

Today, however, as the company reported slightly declining revenue and “unsatisfactory” profits (revenue from North America, for example, was down 11% from a year earlier due mainly to declines in sales of CDMA wireless gear), the new CEO assured listeners that significant change was coming.

“It’s not enough to run faster in the present lane,” Verwaayen said. “Running faster in what we do today will not get us where we need to be. We need to think through what it is we need to do.”

Verwaayen promised to further streamline the company – focusing hardest on increasing profits and cash flow -- and to become more intimate with its customers while being agile enough to lead them through a rapidly changing future – a future that, for telecom service providers and their suppliers, will require them to offer Web 2.0 services with carrier-grade quality. “Many people have tried to be carrier-grade with something that we know how to do best,” he said.

A big part of Verwaayen’s vision for the company, convergence, is not a new one, but the CEO hinted at new ways to approach it. “To move around freely from a physical world to a virtual world in whatever format you choose,” he said. “Inside or outside the office, wireless or wireline, big screen or small screen – it’s just a matter of access to a capability. We can’t afford every single time to reinvent ourselves on every component. So commonality in blocks to be used across the sector will be a key component to be faster and better.”

Verwaayen also said that major carriers are likely to be very conservative in their spending and in their technology and vendor choices over the next year or so – a trend that he said should benefit Alcatel-Lucent. “[Carriers] will probably be less inclined to go to more exotic types of models,” he said. “To go to a faraway market with a new set of financial instruments or to go with the latest version of a technology that is not used anywhere is probably not the part of capex that will get the most attention in the next 12-18 months.”