Alcatel-Lucent won't exit wireless, but LTE will sideline CDMA
Published: 8 December, 2008
READ MORE: Alcatel-Lucent | CDMA | LTE
Although we have to wait until Friday for Alcatel-Lucent's new CEO, Ben Verwaayen, to unveil its much anticipated turnaround plan for the troubled equipment maker, he has dropped some preliminary hints in a bid to quell rumors that the company plans to quit the mobile infrastructure business.
These stories have been flying round the markets for a couple of weeks, with analysts sharply divided on whether ALU's slumping fortunes would be improved by going wireline-only and exiting a business where it takes a distance third place to Ericsson and Nokia Siemens. Judging by comments made by Verwaayen at a presentation in Paris on Thursday, there is no intention to quit wireless, but ALU is likely to make drastic cutbacks in this division, especially in the CDMA market, where it is a clear market leader with over 50% share, but where it is seeing rapid decline in demand and margins.
Instead, the French company will seek to focus its efforts and its new investments in a more targeted way than usual, putting LTE at the center of its new product initiatives and relying on its $6bn cash mountain to tide it over the waiting period for widespread LTE deployment, hoping to emerge as a leading supplier by 2010 and beyond.
"It is not true we are leaving mobile," Verwaayen told news agency Reuters. "Not doing innovation is like shooting yourself in the head. We are not going to cut our lifeline to the future." He said one of his first conclusions on joining ALU in September - "on day two" - was to focus efforts on becoming a leader in LTE, and said only three other companies could support an end-to-end wireless model (Ericsson, NSN and Huawei).
And, in an exclusive interview with Global Telecoms Business, the former British Telecom CEO said his December 12 announcement would offer a clear recipe for addressing the issues that have dogged ALU since its problematic merger, and returning the company to profit.
"Alcatel-Lucent was more of a joint venture than a merger," he told GTB, promising "a new management team and a new business model" within two and a half months of his joining ALU. And he couldn't resist a little boasting about one of the qualities for which he was admitted at BT, his decisiveness - "Normally it would take years," he pointed out.
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