Job Hunting

Career Moves:Is Lucent CFO Hopkins the Next to Go?

Six months after arriving from Boeing, her boss is canned.
Michelle GabrielleOctober 26, 2000

Lucent Technologies finally pointed its fingers, publicly, at the chief source of its sliding success: chairman and chief executive, Richard McGinn.

This recent “ousting” of McGinn now leads one to wonder: Who will be next? Afterall, when a CEO gets canned the CFO is frequently soon to follow.

Mirror Mirror on the wall, will CFO, Deborah C. Hopkins, be next to fall?

This is a tricky situation.

From decreasing market share and stock price to a high rate of employee turnover, Deborah C. Hopkins arrived at Lucent Technologies in April smack in the middle of company-wide turbulence. Her mission, as she already chose to accept it, was to help Lucent pilot its way back onto solid ground. Not that easy, however, when you’re working with a co-pilot who fails to see and “fix” the company’s most pressing “fixable” obstacles.

According to Michelle Davidson, Lucent’s Director of Financial Media Relations, Hopkins was hired in part to improve internal processes; in other words, she is viewed as the solution to Lucent’s problems and not as the cause.

And why shouldn’t she be?

Prior to her arrival at Lucent, Hopkins played a major role as the Boeing Co.’s highly regarded senior vice president and chief financial officer. She also led Boeing’s investor relations and corporate development activities, in addition to serving as chairperson of Boeing Capital, an international provider of financing and leasing for a wide array of aerospace products.

Upon her arrival at Lucent, considered a coup for the company at the time, Hopkins’ goals included the addressing of crucial balance sheet items such as growing accounts receivables, which rose by 40% to $10.4 billion from $7.4 billion in Lucent’s September 30, 1999 fiscal year. She then set out to create incentives for all employees to improve the income statements as well as accounts receivables.

Of course, through her financial management and expertise, investors were also looking to Hopkins for reassurance that Lucent would not disappoint them in their quest for large, growing earnings.

So, there she was… bright, energetic, and eager to make a difference in a telecommunications giant that somehow tripped along its great path of triumph. And although Richard McGinn had made significant contributions to Lucent throughout his existence in the company, analysts like Jafar Rizvi from Sands Brothers, say that Lucent’s situation could have improved a lot quicker if a new CEO was brought in at the same time she was.

“If the CFO is dynamic, ready, willing and knowing how to make positive changes for a hurting company and the CEO is not in sync, a lot of efforts can fall behind,” he says. But in this case, both officers will not be blamed, he insists.

Lucent’s downfall, such as its failure to realize, promptly, the industry’s move toward high-speed fiber optic products, was already deeply imbedded in the Board’s consciousness before the hiring of Hopkins. From the moment she started, she has been quite the spitfire in her mission to help make the turnaround for Lucent.

According to Rizvi, Hopkins has indubitably been exceeding Lucent’s expectations considering the challenges she and the rest of the management team have been up against. For the past six months, she has played a major role in the reorganization of the services business, which is an area of great strength for Lucent; of Lucent’s 125,000 employees, 40,000 of them account for the services division.

Excluding some minor items, Lucent’s DSO (days’ sales outstanding) have been “flat” compared to the previous quarter. “This suggests that Hopkins was able to get a grip on the accounts receivables in the company,” says Rizvi.

In addition, employee turnover has been contained; there are fewer people leaving than in the past. Hopkins is credited with boosting confidence in Lucent’s workers even as its market capitalization was sinking by 70%.

Perhaps the most vital issue tackled by Hopkins is her meticulous evaluation of each division of Lucent. Rizvi explains that Hopkins is analyzing each division and assessing their return on investment. This is helping her to determine which ones to focus on, “thus positioning Lucent’s resources where they will be most effective.”

The fact that Lucent’s CEO has been dismissed does put some added pressure on Hopkins, says Rizvi. Inevitably, “to some extent, there will be an overlap in her job functions and responsibilities with the temporary CEO, Henry Schacht.” He served as chairman from 1995 to 1997, when Lucent was widely credited with being a powerhouse. Before that, Schacht was praised for his direction of Cummins Engine.

“Right now,” says Rizvi, “Henry is in the middle of a learning process. Hopkins will be very instrumental in the transition process with Henry, as well as when a new, permanent CEO steps in.”

Life After New CEO

The hunt for a new CEO is on. “Most likely it will be an outsider,” says Rizvi. From the time Lucent gets a new CEO until the time that new CEO adjusts to every intricate detail of Lucent’s operations, “it could be almost six months or more until the new CEO is in full command.”

In the meantime, can Hopkins survive this transition period? According to Rizvi, as of now, Hopkins will not take the fall with McGinn. However, if Lucent’s situation does not improve, that could cast a shadow on Lucent’s chief financial officer.

Davidson says that Hopkins will indeed be working closely with Schacht’s management team “to improve every level of its business.” The team will depend on her expertise while they take steps to “consolidate Lucent’s corporate infrastructure, moving from a multi- divisional company to one with a single focus on the broadband and mobile Internet, as well as deploy marketing and sales resources to align them against the highest growth opportunity. The team will also work to consolidate all of Lucent’s service capabilities into one organization in order to simplify customer relations and differentiate Lucent’s product with the broadest capability in the industry, in addition to improving supply management.”

It seems as though Lucent has a lot on its agenda, and one may wonder how quickly it could accomplish all this, given that Hopkins is not the only new member of the senior management team.

In only the last few months, Lucent has hired: Martina Hund-Mejean, treasurer; Jeong Kim, president of the company’s Optical Networking business; Bob Barron, president of the company’s Metropolitan Optical Networking business; and Bill Nelson, president of Lucent’s North America sales region.

Meanwhile, the company is also searching for a new chief operating officer.

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