French telecom giant, Alcatel Lucent SA (ADR) (NYSE: ALU), which supplies telecommunications operators and corporations the technology required to build global communications networks, reported annual losses for the fiscal 2012 on Thursday.
The beleaguered company also announced that its Chief Executive Ben Verwaayen will be resigning from his post. The search is on for Verwayyen’s replacement and he will continue to stay as the CEO until his successor is found, said the Company in a statement. The search for the new leadership will be done both within and outside the company, according to the sources familiar with the matter.
Alcatel Lucent, which has been reeling under tremendous pressure due to rising competition from the likes of Ericsson of Sweden, Huawei of China and Nokia Siemens Networks, a Finnish-German joint venture along with burning cash since 2007, reported a loss of €1.37 billion or $1.85 billion, for the fiscal 2012, compared to a gain of €1.1 billion gain, in the year earlier fiscal.
“(it was) clear to me that now is an appropriate moment” for Alcatel-Lucent to find new direction, said Ben Verwatten in a statement.
The board of directors holds divided opinion over Verwaayen’s attempt to turnaround the Company. While some board members are apparently miffed with Verwaayen’s slow progress in turning around the operations, one person said that decision to leave the company was mutual and Verwaayen had succeeded in stabilizing the company, according to the Wall Street Journal.
Verwayyen’s departure comes at time when Alcatel Lucent is going through turbulent phase. France’s Alcatel merged with the U.S. based Lucent Technologies, more than six year ago to create a telecommunication-giant.
However, the deal failed to make any impression in the fiercely competitive telecom landscape. Although its revenue is much lower than its rivals’, Alcatel Lucent is practically present in every line of business, which is not the case with competitors. As a result, Alcatel Lucent has been lacking efficiency. The Company has suffered more recurring rounds of job cuts and restructuring.
Alcatel-Lucent shares rallied in premarket trading following the announcement.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.