Lucent CFO resigns barely a year into the job

Washington

IN another sign of turmoil at Lucent Technologies Inc, the company announced that chief financial officer Deborah Hopkins is leaving the company to pursue “other opportunities.”

Frank D’Amelio, 43 years old, will take the new post at the Murray Hill, NJ, equipment maker. Mr D’Amelio is a 22-year veteran of AT&T Corp and its 1996 spinoff Lucent.

Ms Hopkins’s departure couldn’t come at a more delicate time for Lucent. Since the beginning of the year, the company has sagged under billions of dollars of losses, a Securities and Exchange Commission investigation and speculation about its financial outlook. Ms Hopkins, 46, helped engineer a set of complicated maneuvers — including $6.5 billion in bank lines and 10,000 layoffs — to restore Lucent’s financial health and credibility on Wall Street. In a statement, Ms Hopkins said that with the restructuring program in place, “now was a natural time for me to leave.”

But the effects of her strategy have yet to take hold. Last month, the company reported a $3.7 billion quarterly loss and shrinking gross margins. “The facts are that the restructuring is just beginning,” said Lehman Brothers telecommunications analyst Steve Levy. “Turnarounds are fragile no matter what happens. And this is not the time for a voluntary change.”

Ms Hopkins couldn’t be reached for comment.

Ms Hopkins came to Lucent after two high-profile, albeit short, stints at General Motors and Boeing Co. She was lured to the company by former CEO Richard McGinn, who offered Ms Hopkins a $4.6 million signing bonus. Ms Hopkins, who also received a salary of $287,000, had to stay at Lucent for at least one year to collect the bonus, which she did on April 24. Last year Fortune magazine named her the second most powerful woman in business. Mr McGinn was fired from Lucent in October.

In her first months working with Mr McGinn, Ms Hopkins helped the then-booming company grab a share of the exploding telecommunications market. But the people familiar with the situation said that when Henry Schacht rejoined Lucent in the fall of 2000 as chief executive officer, he was initially troubled by Lucent’s generous use of vendor financing — which pushed billions of dollars to young telecommunications companies with uncertain fortunes. The company has since ratcheted back its vendor-financing exposure, but it still remains a concern for the company’s long-term financial health.

Lucent’s tumultuous year hasn’t been easy on Ms Hopkins. In March, she told The Wall Street Journal she wasn’t fully aware of the extent of Lucent’s problems until she arrived on the job. “I would be disingenuous if I said the thought of leaving didn’t cross my mind many times last fall,” Ms Hopkins said.

People close to the company said that Ms Hopkins hoped to earn the CEO position after Mr McGinn retired from the company. But with Mr Schacht’s arrival, such plans weren’t as likely. Though Mr Schacht is Lucent’s interim CEO, the company’s search for a replacement remains dormant.

Mr D’Amelio is formerly group president of the company’s Switching Solutions Group. He began his career at AT&T’s Bell Laboratories, and has held a number of financial and operational positions at AT&T and later, Lucent.

-- The Wall Street Journal