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Interview: Lucent chief Richard McGinn

Richard McGinn, chairman and chief executive of Lucent Technologies, counts his company as the global leader in 15 different market segments, ranging from voice switching to two forms of data switching and a dominant flavor of wireless networks. Yet McGinn finds himself on the hot seat as investors hold his company accountable for stumbling in a key product area -- optical networking -- and falling short of analysts' expectations.

Richard McGinn, chairman and chief executive of Lucent Technologies, counts his company as the global leader in 15 different market segments, ranging from voice switching to two forms of data switching and a dominant flavor of wireless networks. Yet McGinn finds himself on the hot seat as investors hold his company accountable for stumbling in a key product area -- optical networking -- and falling short of analysts' expectations. McGinn spoke by phone with Executive Editor Carol Wilson.

Inter@ctive Week: Is Wall Street undervaluing Lucent and, if so, what can you do to change that perception?

McGinn: The performance of the business over time has been very strong. We've doubled the size of the business in four years. We did have a bad quarter. This was perhaps unexpected and surprising. If you go back to our analysts' conference last fall, the comments were on the strength and the breadth of our business. Had we not missed a financial quarter, they would be still talking about the strengths of the business. We have to reassert ourselves.

Inter@ctive Week: How do you do that?

McGinn: I think the main thing is to reassert the leadership we have established. We grew more share points than any major player in the industry. We have to once again begin to grow the business starting in this quarter and going forward, so that investors can see our future is not something they can project from the experience of last quarter.

Inter@ctive Week: Should you be developing advertising and marketing campaigns, like those of Cisco and Nortel, that position Lucent as a "hipper" company?

McGinn: The answer is not in having ad campaigns that are fantasy, but in having great technology. This is not meant to suggest we should show electrons moving around in our ads. The image of the company is important to support people feeling comfortable with the high-tech world.

Inter@ctive Week: How do you combat the brain drain -- the loss of talent, especially to start-up companies with venture capital funding and tremendous potential for personal profit?

McGinn: We are not experiencing a brain drain. The management team is strengthened by each acquisition. We have really reshaped the business. Rather than virtually all of the people coming from one place, now 40 percent have had their major work experience from outside AT&T or Lucent. That has been conscious. We have brought people in -- on a worldwide basis -- to have different skills that are required for this business, and to a very great extent we have retained that talent. People moving in and out of positions in the high-tech business is not news. This is normal. Within two years, 50 percent of our people will have joined Lucent since the spin-out.

Inter@ctive Week: You have built a very strong services component with the International Network Systems acquisition and your NetCare initiative. Is that segment of the business being properly valued?

McGinn: Whenever you get into a new technology area at first, hot boxes win. Customers are willing to put up with the lack of support and service. Over time, when they start betting their businesses on the new stuff, they want more strength and reliability. They want network support that integrates technologies together and that lets you go to sleep at night knowing your network is secure. Also, there is a need to scale these networks that was unforeseen 24 months ago, and that's another key area where services becomes critical. I can't bet my future on the next hot box. Competing networks give customers a chance to move from one carrier to another whenever they want.