Scathing Report on CEO McGinn:
lightreading.com
Lightreading is an excellent read due to its ability to state their opinions, without holding back any punches.
THE HAS-BEEN BIN
No.1: Rich McGinn, chief executive officer, Lucent
Rich McGinn
That's Rich
Ah, Dick, where did it all go wrong?
Rich McGinn is the first optical networking executive ever to win a spot in our Has-Been Bin without first having appeared on the Top Ten list of Movers and Shakers. But you can’t say he hasn’t earned his place. His performance is reminiscent of other chief executives named “Richard” – III, Nixon, take your pick. (More Dick jokes in next month's issue).
Consider McGinn’s track record on technology. Under his leadership Lucent Technologies Inc. (NYSE: LU) has missed the boat on lucrative 10-gig technology, while wildly over-estimating revenues from DWDM. McGinn also has gone completely loopy on ATM, at a time when many service providers are starting to look at ways to eliminate it from their networks. He spun in Ignitus (an ATM startup that’s since disappeared without a ripple beneath the surface of Lucent), and paid $4.5 billion to get his hands on Chromatis – which makes a chunky-style, ATM-based, metro service-provisioning platform (see Lucent Catches Chromatis ).
This ATM jihad extends to Lucent’s recent reorganization. McGinn’s solution to Lucent’s woes? Split the optical networking division into two pieces, and put an ATM zealot in charge of each one: Jeong Kim (ex-Yurie), and Bob Barron (ex-Chromatis) (see Lucent Shakes Up Optical Group ). Wonder what technology they’ll favor.
At the same time, McGinn’s ATMania has made things hard for another of Lucent’s acquisitions: terabit router vendor Nexabit – which found that it had to contend with anti-IP remarks not only from its competitors, but also from at least one high-placed Lucent executive (see Lucent Faces "Exodus of Nexabit Staff" ). How professional!
Little wonder, then, that a whole platoon of the Nexabit crew has since left. They’re far from being the only ones; the exodus of talent from Lucent has recently reached biblical proportions (see Avici Nabs Lucent Exec ).
It hasn’t been pretty watching the wheels fall off Lucent, especially when it comes to the financials. It’s hard to imagine that one of the largest players in optical networking would lose money in this market, but that’s what Lucent managed to do last quarter (posting a net loss of $301 million, or 9 cents per share (see Lucent Reports Q3, Confirms Spin-Off ). This at the same time that archrivals Cisco and Nortel are posting record gains (see Cisco Beats Street, Cries 'Optical' ).
Rich’s management style isn’t helping. From what we hear, Rich isn’t really a people person – and his alleged habit of firing people in public during departmental meetings probably hasn’t helped boost morale.
So what does the future hold for McGinn? Here’s a three-part prognosis.
Wall Street types believe that Lucent will not only miss its next quarter, but the one after that.
Launching Lucent’s lifeboat – by spinning out the microelectronics unit – won’t stop the rot (see Lucent Names CEO for Spinoff ).
As revenues from circuit switching continue to dwindle, two more quarters of bad results will prove two too many for the company (and McGinn’s career).
Rich McGinn? Stick a fork in him. He’s done.
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