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Monday, 28 October, 2002, 05:47 GMT
Tough times for hi-tech CEOs
stock price chart

Dwindling demand for many hi-tech goods has made three of America's best-known firms eager to slash expenses to the bone.


There is a negative pall over the entire telecom industry right now

Patricia Russo,
Lucent CEO
The burst tech-bubble has meant hard times for notable names Xerox, Hewlett-Packard and Lucent, each having seen its share price plummet this year.

As a result, they have cut tens of thousands of jobs and drastically restructured their businesses.

Aside from the plunge in stock values, these three tech firms have something else in common: a woman at the helm, guiding the companies through a decidedly stormy business climate.

Despite the chaotic environment, chief executive Patricia Russo from Lucent, Xerox's CEO Anne Mulcahy and Carly Fiorina, CEO at H-P, have silenced critics and pushed ahead with their plans.

Additionally, each professes optimism about the future, saying they are keen to get their firms heading in the right direction.

Trying times

At New Jersey-based Lucent, Ms Russo acknowledges it has been a very challenging year for her firm, although she takes some solace in that Lucent is not alone.

Lucent Technologies CEO Patricia Russo
Russo: Pushing for a reverse stock split

"There is a negative pall over the entire telecom industry right now," she told the BBC's World Business Report.

"What we've tried to do is focus on the things we control," she says.

Facing a precipitous decline in demand for Lucent's networking products, Ms Russo has been forced to rein in expenses, to reach the expressed goal of returning the firm to profitability a year from now.

That has resulted in some difficult decisions, including a 70% reduction in Lucent's workforce to a trim 45,000 employees, dropping morale through the floor.

Even worse for Russo, the company's stock price has fallen over 85% this year, from a high of $7.20 in January to about 80 cents in October.

With shares trading below a dollar a share, Lucent faces delisting from the New York Stock Exchange and on Tuesday proposed a reverse stock split to boost its share price.

Lucent announced on Wednesday it lost $2.8bn (1.8bn) in the June-September period, making it its 10th consecutive quarter of losses.

Accounting woes

Over in Stamford, Connecticut, where copier-firm Xerox is headquartered, the mood is not quite as bleak.

Xerox CEO Anne Mulcahy
Mulcahy: "I'm thrilled to be leading a turnaround"

On Wednesday, the firm reported a profit for the third quarter after it implemented aggressive cost-cutting moves and shifted away from unprofitable product lines.

"We just continue to be hitting on all cylinders as it relates to improving the business model of the company," CEO Mulcahy says, "and it's flowing through to the bottom line."

But Xerox continues to be dogged by the accounting scandals that have plagued it and many other Wall Street firms.

In April, the firm paid $10m to settle a civil suit filed by the Securities and Exchange Commission (SEC) for overstating its profits by $3bn over four years.

Ms Mulcahy told BBC News the settlement, in which Xerox admitted no guilt, means the company's accounting woes have been put to rest.

"We do believe that there are no new issues and therefore we have put these issues behind us."

Accounting problems notwithstanding, Xerox's share price has tumbled over the last 10 months, falling from around $11.50 a share in January to about $7 a share in recent days.

Remaining viable

Cost-cutting is also a huge part of Hewlett-Packard's business plan as it, too, struggles with reduced profits.

Hewlett-Packard CEO Carly Fiorina
Fiorina: Pushed through a big merger with Compaq

"Personally, we are planning for, I would say, low single-digit growth," says Carly Fiorina, the CEO of the newly combined H-P and Compaq.

"The pattern of revenue loss and [market] share loss is very consistent with the assumptions we made, and sometimes we are doing better."

Ms Fiorina has staked her career on the contentious merger, completed in May, in the belief that consolidation within the tech industry is necessary to remain viable.

Despite the union, however, the combined Silicon Valley-based firm recently slipped from the top computer maker to number two, overtaken by a rejuvenated Dell Computer.

In addition, the marriage of the two firms has resulted in a number of redundancies, causing the loss of 10,000 jobs.

Fighting spirit

But for these three chief executives, it is not all doom and gloom.

Driven by a conviction that they are right, they apparently rise each morning with unbridled enthusiasm.

"I get up every morning, and I'm anxious to fight the next fight," says Lucent's Ms Russo.

For Xerox, H-P and especially Lucent, it is a fight for survival.

And only time will tell if this trio of CEOs can fight the good fight - and win.


Analysis

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See also:

23 Oct 02 | Business
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