In the face of dire profit warnings, the board of directors of Lucent Technologies has replaced Chairman and Chief Executive Officer (CEO) Richard McGinn with Henry Schacht, who had the top job at the company from 1995 to 1997.
Schacht will serve as interim chairman and CEO and will assist Lucent in the search for a new chief, Lucent said Monday. McGinn's dismissal had been widely expected as the company continued to struggle financially.
One analyst suggested that McGinn's ouster was the Lucent board's way of assigning blame for the company's recent financial woes and not hitting its earnings mark for five straight quarters.
"It's not terribly surprising since Lucent has been stumbling and missing their earnings," said Alex Benik, a telecommunications analyst with Yankee Group Inc. in Boston. "Someone had to take the fall for this. I don't think this is the miracle potion. This goes farther down then the executive office."
Schacht, 66, was named chairman in March of Avaya Inc., Lucent's networking spinoff, and will now step down from the post though he will remain on Avaya's board of directors, Lucent said in a statement Monday.
Lucent revised its profit estimates downward on Oct. 11 for its fiscal 2000 fourth quarter from US24 cents per share to between 17 cents and 18 cents per share and said revenue for the quarter, which ended Sept. 30, will be in line with previous estimates of between $US9.3 billion and $US9.4 billion.
Three factors were to blame for the lower-than-expected earnings, Lucent said. Those include: lower-than-expected revenues and gross margins in the company's optical systems business, credit concerns in the emerging service-provider market that led to increasing reserves for bad debt, and a greater-than-anticipated decline in circuit-switching sales and margins.
For fiscal 2000, Lucent expects overall profit to be 10 percent to 11 percent lower than in 1999, on revenue approximately 14 percent higher.
Lucent will continue with its plans to spin off its microelectronics business and to sell its power systems business, the company said.
Lucent Technologies can be reached at http://www.lucent.com/.