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More bad news from telecom maker Alcatel-Lucent this morning: The third earnings warning so far this year.
The Wall Street Journal says the company is facing increasing competitive pressure from Ericsson and from emerging Chinese companies Huwawei and ZTE.
Clearly the merger of Alcatel and Lucent has proved a bust, which is what we warned back when reports of a pending merger emerged in early 2006 in one of our first investment-oriented postings.
"If you merge two non-disrupting companies, each saddled with commoditized products in non-growth markets, do you get a better company as a result?"
Why most mergers fail:
- They don't create new services or products
- They don't create new customers
- They focus management on financial engineering or deal-making rather than customers
How to boost your chances of merger success (pdf) using a disruptive approach.
**Other views**
Denial is a CEO's worst enemy: Alcatel-Lucent CEO Pat Russo, interviewed by WSJ:
"We're seeing a bit of softness... that may or may not have something
to do with what's going on in the U.S. economy: homestarts, home
buildings... It has nothing to do with the merger."
This article in Industrial Distribution magazine says there are five rules of successful M&A based on management guru Peter Drucker's writings.
NY Times: Alcatel-Lucent tumbles on outlook
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