* Faces steep task ahead after Verwaayen's departure
* Expectations new CEO will speed up cost cuts -unions
* Analysts say grp needs shake-up to meet targets
(Adds details, background)
By Leila Abboud and Catherine Monin
PARIS, March 27 Michel Combes, who will take
over as chief executive of Alcatel-Lucent on April 2,
will present his plan for the loss-making telecom equipment
maker in June, a spokeswoman said.
The 51 year-old former head of Vodafone's European
business faces a steep task if he is to solve the group's
problems of persistent cash burn, high costs, and stiff
competition from larger rivals Sweden's Ericsson and China's
His predecessor Ben Verwaayen was unable to deliver a
promised turnaround in his five-year-long tenure, hampered by
being too slow to launch major cost cuts and also weak demand
for telecom gear last year. His departure was announced in
February after the group posted a 1.4 billion-euro ($1.8
billion) net loss for 2012.
"Combes gave himself the month of March to listen and learn
about the situation of the company by meeting with major
customers and employees," said a spokeswoman for Alcatel-Lucent.
"He will take two months to decide on a plan and will
announce in June the major strategic orientations for the group
in the three coming years."
Labour union representatives who met with Combes on Monday
said they expected him to accelerate the 1.25 billion euro
cost-cutting plan, which includes 5,500 job cuts, started by
previous management, but to take time to decide on asset sales
because the group secured additional funding in a January bond
"Michel Combes explained that it was imperative to go more
quickly on the plan to cut jobs," said a labour union source who
declined to be named because the talks were internal.
"He doesn't reject the idea of asset sales if they make
sense, but we are no longer in an urgent mode to sell under
pressure from the markets."
Alcatel-Lucent said last year it was considering divesting
non-core assets worth 1-1.5 billion euros. Banking sources
earlier told Reuters that the undersea optical cable business,
and a unit that sells telecom gear and services to corporate
customers were being evaluated for sale.
Some analysts have already begun to say that Combes may have
to go much further to reduce the size and product portfolio of
Alcatel-Lucent for it to achieve its 2015 target for an adjusted
operating margin of 6 to 9 percent.
Morgan Stanley analyst Francois Meunier argued in a note
that Alcatel-Lucent should sell off its entire optics business -
undersea cables and land where competition with China's Huawei
is fierce - as well as its fixed line products, long one of the
group's core strengths.
Pierre Ferragu from Bernstein Research also believes a more
radical revamp of the group's activities will be needed, but
questioned whether the company's board and management team would
"For the time being, it seems that Combes does not have the
backing from the board to implement radical changes to the
company's perimeter," said Ferragu, adding that the CEO's pay
package and bonus were linked to the 2015 objectives laid out by
"But Combes could later come back to the board in six months
or a year and seek support for bolder changes."
Alcatel-Lucent's selling and administrative expenses as a
percentage of sales stands at 16 percent, compared with 11
percent for competitors Ericsson and 10.5 percent for
Nokia-Siemens Netwoks, according to analysts.
($1 = 0.7777 euros)
(Reporting by Leila Abboud and Catherine Monin; Editing by