Lucent Technologies Inc.’s new chief executive officer has big plans to accelerate the company’s expansion here and abroad.
Already increasing its local payroll, Lucent is now facing a growing need for space at Lucent’s 325-acre Lisle/Naperville complex, said Richard A. McGinn, the company’s 51-year-old chief executive.
“There’s a lot of work going on there, and we’re looking at the need to hire more people,” he said in an interview.
Employing about 10,500 people, Lucent’s Lisle/Naperville site represents the company’s largest concentration of employees in a single complex and is one of the largest employers in the two western suburbs. Last year, 9,500 people worked at the facility, and the company is now looking to add about 500 more software developers, electrical engineers and other people with information-systems backgrounds.
The six-building complex is home to the Murray Hill, N.J.-based company’s Network Systems unit, which provides the software that telecommunications service providers and cable television companies use to manage their networks. Its main building opened in 1966 as the main location for electronic-switching development by Bell Laboratories and Western Electric, two AT&T Corp. units that evolved into Lucent.
“We can’t continue to expand head count without doing something with facilities,” said Robert Jerich, a Lucent spokesman. “We’re either going to have to build, lease or do a combination of both. It wouldn’t surprise me if we did this before the end of the year.”
While no official plans are set, Jerich said Lucent would most likely lease space during the time it takes to build a new facility on land Lucent already owns.
McGinn, who started his career in 1969 as a salesman with Illinois Bell, said his goal is to keep Lucent on its fast growth track while increasing its role as a global player and placing greater emphasis on customer needs.
When it was spun off from AT&T, conventional wisdom was that Lucent would be handicapped by moving into a mature manufacturing industry without a well-known brand name and faced the greatest challenge in turning a profit.
It was assumed that the nation’s dominant long-distance phone company was spinning it off to free itself of those problems.
Instead, AT&T has continued to stumble and Lucent has soared, introducing new products and winning new contracts.
Indeed, since its initial public offering in April 1996, Lucent stock has risen 220 percent and its profits in the third quarter tripled from a year earlier.
In an interview, McGinn said he’s “not uncomfortable” with Wall Street’s expectations for the fourth quarter and for the year. Analysts expect Lucent to report fourth-quarter earnings of 50 cents a share and 1997 earnings of $2.28 a share, according to a First Call survey of 26 analysts.
In the fourth quarter of 1996, Lucent reported profits of $255 million, or 40 cents a share, on revenues of $5.92 billion. For the year, it reported net income of $1.05 billion, or $1.65 a share, on revenues of $23.3 billion.
“We’re off to a good start,” McGinn said. “There are ferocious competitors out there. And while we’re pleased with our progress to date, we must accelerate our ability to improve. We’re learning to be a good company. We never think we’re there yet. Our outlook is a healthy paranoia.”
In the past few weeks, Lucent made several key moves, including a $1.8 billion acquisition of Octel Communications, a leading voice, fax and electronic messaging company. The purchase allowed Lucent to create a messaging business that captures about 20 percent of the total messaging market, which is expected to double to $10 billion by the year 2000.
Lucent also sold off part of its defense business to General Dynamics Corp. and created a joint venture with Philips Electronics N.V. that will make digital and analog cellular phones, answering machines and pagers.
McGinn has been waiting in the wings for two years to take over the top spot at Lucent. When AT&T spun off Lucent in 1995, AT&T Chairman Robert Allen named McGinn president and chief operating officer of Lucent, while pegging Henry Schacht, a former chairman of Cummins Engine Co. and an AT&T director, to be chairman and CEO.
McGinn was finally anointed last week. Schacht, 63, will continue as the company’s chairman until the middle of 1998.
