Lucent's Russo sees further consolidation
By Jonathan Moules in New York
Published: May 9 2003 17:31 | Last Updated: May 10 2003 0:17
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Pat Russo, chairman and CEO of Lucent Technologies, the lossmaking telecommunications equipment company, on Friday said consolidation was essential to restore the industry to growth.
Speaking at Lucent's analyst day, Ms Russo said mergers could help all sections of the telecoms industry. "Everybody cannot be everything and do everything in an environment where the spending is constrained."
She added that the survivors would need to focus on their "competencies and distinctive strengths".
Her comments follow three miserable years for telecoms equipment suppliers worldwide in which spending by wireless and terrestrial phone companies has collapsed as the carriers battle weak demand and a hangover from the late nineties telecoms binge.
Ms Russo's recognition of the need for mergers echoes longheld views on Wall Street, which has long said there is too little demand to justify the current number of players. However, consolidation has been frustrated partly due to the fact that Lucent and its peers, such as Canada's Nortel Networks and Alcatel of France, are considered national champions in their home markets.
Michael Powell, chairman of the Federal Communications Commission, the US telecoms regulator, last October argued that companies such as Lucent and Nortel "must survive" if innovation in the industry was to continue.
Ms Russo said on Friday see does not predict an "major mergers" and pointed to partnerships, such as that announced this week between Lucent and Juniper Networks, as an important part of the industry's recovery.
Lucent, which has reported 12 consecutive quarters of losses, has cut its workforce by 64 per cent to 38,500 and reduced operating expenses by 74 per cent to $700m in the last two years in an effort to return to the black. Frank D'Amelio, Lucent's chief financial officer, on Friday reiterated the company's target of cutting another 3,500 jobs by the end of the year.
"We believe the restructuring moves have significantly reduced or improved our overall cost structure," Mr D'Amelio said. "There's been a lot of redesign and it is helping us achieve our goals."
Lucent shares, which fell below $1 last September, were down 2.7 per cent to $2.15 by the New York close.
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