Profits plummet, investors howl and Richard McGinn has packed his bags. It's now down to old boy Henry Schacht to recover lost ground. His primary task: winning multi-billion dollar optical fixed line and wireless contracts from big companies. And by spinning off the valuable Lucent Microelectronics he may even manage to keep the investors quiet.
They say you should forgive and forget, but shareholders hold to different ethics. Past mistakes are now plaguing Lucent, which failed to develop OC-192, the next generation optical technology that is currently lining Nortel's pockets. Lucent's terrible quarterly results - a net loss of $225 million compared to a net income of $947 million this time last year - say it all.
Mr Schacht, replacing the dismissed Richard McGinn as CEO, needs to quickly find some shareholder value. It can come from two sources. First, Lucent needs to win a few of the big optical fixed line and wireless contracts. That will require better R+D to ensure it gets to market quicker than its competitors, and training its sales team. At a technological level there is little to differentiate between Lucent and its competitors - but evidently its sales team is struggling to convince customers to buy.
Yet Mr Schacht can do more to appease the shareholders. Lucent Microelectronics, the optoelectronics division, shines out from the company's balance sheet. It needs to be freed from the shackles of its parent. Mr Schacht should quickly initiate its spin off so that it can realize its full potential. That in itself may be enough to coax investors back.