Patricia Russo's planned departure as Alcatel-Lucent's chief executive swiftly turned to speculation about her replacement Tuesday, as analysts named former BT Group chief executive Ben Verwaayen among their favorites.

Other contenders cited by analysts include former Alcatel executive Philippe Germond, now CEO of Atos Origin, former Alcatel Chief Operating Officer Mike Quigley, and former France Telecom boss Thierry Breton.

Earlier Tuesday Alcatel-Lucent said the architects of its 2006 merger, Russo and Chairman Serge Tchuruk, will step down. Analysts agree that whoever takes charge will face stern challenges and need to take drastic action as the telecommunications equipment maker wrestles with savage competition in a stagnating market.

Dutch-born Verwaayen, 56 years-old, was vice chairman of the management board at Lucent Technologies before he joined BT in 2002.

"Over the past few months, Ben Verwaayen and Thierry Breton have been suggested in the press as potential candidates, both of which would be well received in our view," Credit Suisse analysts said in a note to investors.

Contacted through a BT spokesman, Verwaayen declined to comment Tuesday.

Breton, who helped to steady the ship at France Telecom before becoming French finance minister under former President Jacques Chirac, was elected to the board of grocery giant Carrefour Monday and is teaching at Harvard University. Breton wasn't immediately contactable Tuesday.

Atos' Germond, once the dauphin to Tchuruk at the former Alcatel before abruptly leaving in 2005, is also seen as a contender.

"He did a good job at Alcatel, he's a good cost cutter," said Sebastien Sztabowicz, a Paris-based analyst at Landsbanki Kepler. "Will he want to leave? That's the question."

Germond recently endured a bruising battle with Atos' activist shareholders Pardus Capital Management LP and Centaurus Capital Ltd. A spokeswoman for Atos wasn't immediately available for comment.

Alcatel-Lucent could also look to the past and former Alcatel COO Mike Quigley to fill the role. Quigley was a talented executive and rising star who was seen being groomed to eventually run the company before the merger.

Tchuruk had anointed him as his successor in 2005. After the merger, many expected him to eventually succeed Russo. However, he resigned from the company in August 2007. Quigley wasn't immediately contactable.

"We held Mike Quigley in high regard," said Nomura analyst Richard Windsor, "but he left the company shortly after the merger for personal reasons."

In addition to the native Australian's experience within the French corporate culture of Alcatel, Quigley ran the North American telecommunications business for Alcatel, and had extensive ties with the U.S. telcos.

Being able to "bridge the North American and French cultures" inside Alcatel-Lucent should be a key attribute of the next CEO, Windsor said.

Whoever takes over, they will need to take some drastic steps to improve Alcatel-Lucent's performance.

"A new management team is likely to improve investor confidence and opens a wider range of options for turnaround of the company," said Sanford C. Bernstein analyst Pierre Ferragu in a note to investors.

Ferragu outlined two possibilities for the company, one involving a break-up and the other focusing on "a more aggressive division-by-division" turnaround.

Outgoing Russo, who may pocket as much as EUR6 million in her severance package depending on the company's performance, will help the board with the search for her successor.

On a conference call Tuesday, Russo gave away few details about who might replace her, saying only that her successor should have "a knowledge and understanding of the industry" and "good leadership and management capabilities."

Source:Dow Jones