ORLANDO, Fla. — Lucent Technologies made a mistake by growing too fast and organizing inefficiently into 11 "hot little businesses," the top executive of the communications equipment maker told shareholders Wednesday.
The company, one of the nation's most widely owned stocks with more than 5 million shareholders, also missed an opportunity to bring more advanced optical-network technology to the market first, Chairman and Chief Executive Henry Schacht said to the 600 attending Lucent's annual shareholders' meeting here.
Lucent investors have taken a pounding since late 1999--long before the economy or the telecommunications market began to sour--watching the stock tumble more than 85% amid a stream of strategic gaffes, missed profit forecasts and a federal investigation into the company's accounting practices.
"We know what went wrong. We're in the process of fixing it," said Schacht, who was reinstated as Lucent's interim chairman and chief executive in the fall after Richard McGinn was fired.
Schacht reiterated plans to get the company back on track by cutting $2 billion in annual expenses. The plan calls for a sweeping reorganization that centralizes operations and eliminates 16,000 jobs. Lucent also plans to proceed with its spinoff of Agere Systems, a 16,500-worker unit that makes optical components and communications semiconductors.
But frustrated shareholders, though appreciating Schacht's candor, found little consolation in his turnaround plan for the company that was spun off by AT&T in 1996.
"Since we're here in Orlando, I would say Mickey Mouse and Goofy could have done as good a job running this company," shareholder Martin Glotzer told Schacht.
Shareholders narrowly approved a proposal requiring directors to be elected every year instead of every three years. The vote, however, isn't binding because an 80% majority is required to change the company's bylaws.
If anything, the outlook for Lucent has only turned bleaker in recent weeks: The company lowered its profit forecasts again; the Securities and Exchange Commission launched a formal investigation into Lucent's accounting practices; two debt-rating agencies cut Lucent's credit rating to a notch above junk-bond status; and lenders have balked at issuing a new $4.5-billion line of credit.
As a result, Lucent's stock is teetering on a four-year low. In Wednesday's trading on the New York Stock Exchange, shares of the former Wall Street favorite fell 74 cents, or 6%, to close at $11.60, down from a peak of $84 and its first close below $12 since January 1997.