NEWSMAKER-Alcatel COO is a rising telecom star
By Ben Klayman
CHICAGO, June 28 (Reuters) - The collapse of Alcatel's (NYSE:ALA - news) purchase last month of Lucent Technologies Inc. (NYSE:LU - news) has not stopped Alcatel Chief Operating Officer Krish Prabhu's ascent as one of the telecommunications industry's hottest stars.
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Prabhu, 46, is among a handful of candidates who could be tapped to lead Lucent or Nortel Networks Corp. (NYSE:NT - news)(Toronto:NT.TO - news), industry observers said.
It remains to be seen if Prabhu, an engineer who has risen to the big leagues of the telecom industry, would have what it takes to turn around a Lucent or a Nortel -- both equipment giants have struggled with slowing demand that has forced drastic job cuts. But he does have fans on Wall Street.
``He's the one person on the Alcatel side that Wall Street actually likes, Wall Street gets along with,'' one analyst, who asked not to be identified, said of the Indian-born American executive. ``We thought he maybe would be the guy that would leave and become chief executive of Lucent or Nortel.''
Alcatel's failed takeover of Lucent meant Prabhu lost the chance to run Lucent's Bell Labs, where he launched his career as an engineer in 1980.
While he would not comment for this story, interviews with industry officials, analysts, mutual fund managers and friends paint a picture of a driven, charismatic executive -- even if it remains to be seen if he is picked to run a telecom equipment firm.
Born in southern India, Prabhu came to the United States in 1975 after earning a master's degree in physics from the Indian Institute of Technology in Bombay.
He then earned master's and doctoral degrees in electrical engineering from the University of Pittsburgh and in 1980 he was hired at Bell Labs, then part of long-distance telephone giant AT&T Corp. (NYSE:T - news). He joined Rockwell in Dallas in 1984.
'NOT YOUR FIGUREHEAD LEADER'
Described as driven yet friendly, Prabhu joined Alcatel in 1991, when the French telecom equipment company bought the Rockwell unit where he worked. He has held Alcatel's top spot in the United States since 1997, and in 1999 was named COO.
``He's not relying on others to tell him what to say,'' said Ken Wigglesworth, a venture capitalist who was chief financial officer of Newbridge Networks, which Alcatel bought last year for $7.1 billion. ``He's not your figurehead leader.''
Prabhu also isn't one to feel lost in the research labs.
``He has an amazing ability to go across all technology boundaries, all the way from the most theoretical optical networking stuff in the university to how do you make a buck with the stuff in the field,'' said Bill Osborne, dean of the University of Texas at Dallas engineering and computer science school, where Prabhu taught part time in the late 1980s.
On the other hand, Prabhu can move freely between the lab and Wall Street, said Paul Pandian, who worked with Prabhu at Rockwell and has known him almost 20 years.
``He started out as a pure and simple engineer, but very soon he became a businessman as well. That kind of a transition, very few people have made successfully,'' said Pandian, now CEO of a Dallas telecom software company.
However, questions remain about his experience.
``He knows the technology. He's quite dynamic himself, but whether he's quite got what it takes to run a whole company, I'm not sure,'' said Susan Anthony, an analyst with Credit Lyonnais in London.
She nevertheless credits Prabhu for helping to change attitudes at Alcatel, a former conglomerate that over the last several years has transformed itself under CEO Serge Tchuruk's leadership into a leading communications equipment firm.
Notwithstanding the collapse of the $23 billion merger with Lucent, Prabhu also is credited with implementing Alcatel's aggressive North American expansion the last several years. Since September 1998, Alcatel has spent more than $15 billion acquiring eight North American firms.
DEVOTED TO FAMILY
Business alone doesn't drive Prabhu, who is devoted to his wife and three children, friends said. He has remained in Dallas to allow his children to finish high school in America.
His family already has lived overseas once. Prabhu was president of Alcatel's Belgium-based broadband products business from 1995 to 1997, when the company launched its digital subscriber line division.
While he doesn't speak French, Prabhu recently told Fortune magazine he would welcome the opportunity to run Alcatel, and company insiders credit him with bridging the American-French relationship quite nicely.
Prabhu is a keen supporter of young entrepreneurial students, especially those from Third World countries, and is very active in the Dallas community, friends said. He also is still a sought-after speaker on the Indian lecture circuit.
Prabhu's experience puts him at the top of the list for any company searching for a new leader, industry officials said.
Lucent and Nortel are likely eyeing many of the same candidates, said Scott Scanlon, chairman and CEO Hunt-Scanlon Advisors, a Stamford, Connecticut-based market research firm that tracks executive recruiting.
FITS THE BILL
``When I look at both of these assignments, the No. 1 item at the top of the agenda for the incoming CEO is that this is obviously a turnaround situation. He seems to fit the bill,'' Scanlon said of the prospects of Prabhu leading either Lucent and Nortel.
Both firms have been tight-lipped about their searches.
The delay in finding a replacement for Lucent CEO Henry Schacht, who came back to lead Lucent after his protege, Rich McGinn, was forced out last October, suggests some candidates have been scared off by Lucent's problems, Merrill Lynch analyst Michael Ching said.
``Is this a new challenge for Jack Welch?'' he said, suggesting the turnaround at Lucent will require an executive as talented as General Electric's storied CEO. ``The depth of the problems are pretty severe.''
Nortel has insisted it will consider both internal and external candidates to replace retiring CEO John Roth. However, analysts said the world's largest telecom gear maker, which recently predicted a staggering $19.2 billion second-quarter loss, needs an outsider at the helm.
Other potential candidates at Nortel include former Nortel CFO Peter Currie, now CFO of Royal Bank, Canada's largest bank by assets; former Nortel president and former Bay Networks CEO, David House, who is president and CEO of telecom equipment start-up Allegro Networks Inc.; and Don Listwin, who left Cisco Systems Inc. (NasdaqNM:CSCO - news) where he was seen as potential successor, to head up software maker Openwave Systems Inc. (NasdaqNM:OPWV - news) |
