LIVE FROM ALCATEL-LUCENT TECHNOLOGY SYMPOSIUM 2014: Michel Combes, CEO of infrastructure vendor Alcatel-Lucent, claimed this morning that after a long period of uncertainty for the company, it is “now back in this game to win”.
“It’s probably worth reminding you that 20 months ago, the company was in a very difficult position. We were in financial distress. I even said publicly that the company was nearly bankrupt. Obviously that’s not a situation you like to be in, and your customers don’t like you to be in this type of situation, because of the continuity of services you have to provide,” he commented.
“Now that that transformation is done, we need to look at how to unlock growth – profitable growth. Because of course I’m not interested in growth for growth, I’m interested in what is profitable for the company and makes sense for our customers,” the executive stated.
Under Combes’ leadership, Alcatel-Lucent has been executing on what it called “The Shift Plan”, which has focused on three areas – refocusing, restructuring and refinancing.
“Alcatel-Lucent has clearly moved from being a generalist company, which was tough to be because we were not big enough to play in all the segments in the industry, to become a specialist of IP, of cloud and of ultra-broadband technologies. Today I hope our positioning is very clear, and resonates with our customers and the market evolution,” he said.
“The company has not generated any cash since 2006… It’s obviously quite an important goal for us to be cash positive next year”
While Combes’ presentation was unsurprisingly forward-looking, he did reiterate that it still has one important metric to meet. “The company has not generated any cash since 2006, we have consumed more or less between €600 million and €800 million cash per year, in the past six years. It’s obviously quite an important goal for us to be cash positive next year.”
With the first stage of The Shift Plan largely accounted for, the CEO used three more words to describe its direction moving forward: innovation, transformation and growth.
“I was concerned 18 months ago when we were under stress, that we would not have enough financial resources to invest in innovation. The good news if you look at what we have done, we have reduced our costs everywhere but in innovation. The only thing that we have done is to shift some of the resources from legacy products to where we have decided to play, in order to be even more relevant in those spaces,” Combes said.
But in its new role as a challenger, Alcatel-Lucent also needs a new attitude to support this. “We have to behave no more as an incumbent, we have to behave as a disruptor of this industry. That’s a real change, because this company has been established for many years, and so my real push is so that we all adopt a disruptor type of mindset, in order to make sure that on a daily basis, we continue to change the capabilities,” he observed.
“We have to behave no more as an incumbent, we have to behave as a disruptor of this industry”
One area he highlighted was the need for the company to partner in order to boost its position beyond what can be achieved on its own. “We used to have technology partnerships, but we were from time-to-time a bit reluctant to be open and really go deep in those partnerships,” the executive admitted.
Examples of such partnerships include a deal with Qualcomm in the small cells space, an alliance with Intel to work on “our virtualised RAN journey”, and a new partnership with Freescale Semiconductor, which is “more of an R&D partnership” around network virtualisation.
“It’s now that it starts to be exciting. In the past 18 months when we asked people for efforts just in order to recover, that’s not easy. But now that we are back in the game, we have the ability to really regain the leadership position that we had in this industry in the past, and contribute to the shaping of the market,” he stated.