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UPDATE 1-Alcatel-Lucent starts search for new top managers

(Adds analyst quote, detail)

PARIS, July 29 (Reuters) - Potential successors to the ousted CEO and chairman at Alcatel-Lucent ALUA.PA could include departed Alcatel directors and a former French finance minister, according to analysts.

The telecoms equipment group on Tuesday said it would part ways with chairman Serge Tchuruk and chief executive Patricia Russo after cutting expectations again for the third quarter, raising hopes a new team would turn the group round and improve its fortunes.

Alcatel-Lucent said the search would start immediately.

Analysts said names in the hat to replace Russo included former French finance minister Thierry Breton, industry veteran and well-regarded trouble-shooter Philippe Germond, who was Alcatel's chief operating officer between 2003 and 2005, and Ben Verwaayen, the former head of BT Group BT.L.

“It is hard to see who would want to take on the leadership roles at Alcatel-Lucent. In addition to the role heading Motorola Mobile Devices, this creates further job vacancies in the sector that will be almost impossible to fill,” said Ben Wood at CCS Insight.

Breton, who helped overhaul France Telecom FTE.PA after it nearly collapsed under debt in 2003, was teaching at Harvard Business School this year and could be available, they said.

Germond was Tchuruk's chief executive in waiting before the merger. Germond has been heading French IT services group Atos Orgin ATOS.PA since October 2007.

“Germond knows the company well. If Alcatel-Lucent decides to call him back to head the group while giving him room to manoeuvre, he should not refuse,” said Sebastien Sztabowicz, analyst at Landsbanki Kepler.

Germond’s position at Atos has been weakened due to a fierce battle with private equity shareholders over the company’s speed of recovery, which means that he could be interested in leaving for a fresh challenge, analysts said.

FRESH AIR

“This clearly calls for a specialist who has done M&A. It needs somebody who comes in with fresh air,” said Bettina Tratz-Ryan, research vice president at technology market researchers Gartner.

Another name mentioned is that of Michel Combes, former finance director of France Telecom, who now heads the private-equity-controlled broadcasting tower operator TDF.

Combes has also recently been appointed head of the strategic committee of Atos and is non-executive chairman of French video games group Infogrames IFOE.PA.

Verwaayen left Dutch KPN KPN.AS to work for Lucent prior to joining BT in 2002, from which he stepped down in June.

“It is now time that the company acquires a personality of its own, independent from its two predecessors,” said Tchuruk.

Tchuruk’s boots will be big to fill as the seasoned executive had built close relations with the French government and earned respect from the country’s captains of industry.

He also had experience handling France’s powerful unions, angered by the group’s plans to cut more than 16,500 staff by the end of 2009.

“Tchuruk ran Alcatel well, and, given the difficulties it faced, he handled it really well,” Nomura analyst Richard Windsor said.

Alcatel-Lucent also said it was initiating a process to change the composition of the board to a smaller group that will include new members. To start with, it said Henry Schacht, former CEO of Lucent, would leave the board immediately.

“Governance and leadership can’t pull in two different directions,” James Post, professor at Boston University School of Management said.

“The board wanted one course, Russo and Tchuruk the other. It was time to part ways.” (Additional reporting by Tim Hepher, Jessica Mead, Dominique Vidalon and Tarmo Virki in Helsinki, editing by Will Waterman, Paul Bolding)

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