Lucent Ousts Hopkins As CFOgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
May 6, 2001
Lucent Ousts Hopkins As CFO
Filed at 10:17 p.m. ET
MURRAY HILL, N.J. (Reuters) - Struggling telecommunications equipment-maker Lucent Technologies Inc on Sunday ousted Chief Financial Officer Deborah Hopkins, the high-profile executive it nabbed from Boeing Co just a year ago, and tapped company insider Frank D'Amelio as her replacement to oversee its restructuring.
Under Hopkins, who got a $4-million signing bonus when she came to Lucent in April 2000, the company posted massive losses, saw its stock drop 82 percent and announced 10,000 job cuts. Hopkins also oversaw Lucent's lackluster spin-off of optical components unit Agere Systems Inc.
Lucent said Hopkins ``is leaving the company to pursue other opportunities,'' but declined further comment. Sources familiar with the situation said Hopkins will spend time with her family before deciding on her next career move.
Shares in Lucent closed up 4.21 percent to $11.15 on Friday. The stock has underperformed the Standard & Poor's 500 Index by about 78 percent over the past year, and lagged behind shares of rival Cisco Systems Inc. by about 40 percent.
Although Hopkins helped Lucent negotiate $6.5 billion in new financing in February, investor concerns lingered and forced the company in early April to deny rumors it would file for bankruptcy protection.
Credit rating agencies had warned they may cut Lucent's rating to junk status. Lucent posted a second-quarter loss of $3.7 billion, but some analysts saw the stabilized balance sheet and stronger-than-expected revenues as signs of progress.
Sources said Lucent's Chairman Henry Schacht had a markedly different management style, strategy and priorities, than former Chairman Rich McGinn, who hired Hopkins. McGinn was fired in October after a series of profit shortfalls and product development missteps.
Lucent said D'Amelio, formerly president of Lucent's Switching Solutions Group, has both the financial and operational expertise the company needs during the next phase of its restructuring. Hopkins had strong financial skills, but she lacked the necessary product knowledge and industry contacts, sources said.
``It's difficult to change leadership at a critical time like this... we're not sure what Lucent's going to look like a year from now. It's still scraping bottom and has months of agony ahead,'' said independent telecommunications analyst Jeffrey Kagan.
Hopkins had joined Lucent just a few months after its financial woes surfaced. Since then, the problems worsened, competition intensified, and telecommunications carriers began cutting their equipment purchases in the slowing economy.
Hopkins had been a key architect of Boeing's financial turnaround, but failed to meet some of Schacht's expectations, sources said. Hopkins had been widely credited with helping Boeing rebound from a 1997 loss, its first in 50 years, and she helped refocus the aerospace giant on the bottom line. The company reported profits in 1998 and 1999.
The details of Hopkins' separation package have not been completed, but the discussions have been amicable, sources said. Hopkins was not immediately available to comment.
With D'Amelio, Lucent has a CFO ``who understands everything from our finances to our photons. He has the balance sheet view and the broadband view,'' said Lucent spokesman Bill Price. D'Amelio began his career in 1979 at Bell Laboratories, the well-regarded research and development arm of Lucent.
D'Amelio has held a variety of financial positions in telephone company AT&T Corp. and Lucent, including the role of CFO of Lucent's Network Systems business from 1996 to 1998 before moving to an operational job in the business.
As CFO of Lucent's Network Systems business, D'Amelio was responsible for all accounting and financial functions for the $17 billion global business. At that time, the Network Systems business closely resembled the core service provider business that the ``new Lucent'' is becoming as it completes its restructuring.
Lucent has been selling or spinning off various businesses, such as its optical components and corporate telephone network businesses, to pare debt and hone its strategy. Once it finds a buyer for its fiber-optic cable unit, Lucent will be comprised of wireless, data and optical networking, circuit switching, and professional services businesses.
``As we continue to execute on our business restructuring program, Frank's deep knowledge of both our financial and product portfolio will be key,'' Schacht said.
As part of its management changes, Lucent also said it combined its software switching and data networking units and named Janet Davidson, formerly Lucent's group president of InterNetworking Systems, to lead the new unit.
``The time is right, for Lucent and for the technology, to combine our switching and data networking businesses in a way that best meets the needs of large service providers,'' Schacht said.putting together all the elements and skills required to build next-generation communications networks. The new unit, which has yet to be named, will have about 15,000 employees.
-- CAkidd (CAkidd_94520@yahoo.com), May 07, 2001