I am a full proponent of corporate restructuring; I believe in it.  However, being a realist goes with the profession and this means that Alcatel and Lucent need to say goodbye to one another.  Since Alcatel runs the show the process goes like this:  Alcatel gets to pick what it wants and gets to toss what it does not.  By the way this is not a bad thing.

The key thing is to leave with what will enable you to grow and whatever is left needs to be able to exist on its own or be sold off to someone that wants the leftovers.  It is way too late to spend time identifying how to keep the Alcatel-Lucent company together as a going concern.

The time has come to give up on integrating the two disparate corporate cultures.  Product lines have not been merged well at all.  There is no corporate identity.  The company looks like it has been glued together.

I gave Russo a lot of credit for everything she has done to get Alcatel to acquire Lucent.  However, it is time for Alcatel to cut its losses.  Now mind you, I am not saying there is no value in Lucent because there is.  Lucent has a troubled wireless division.  However, the division needs to be kept by Alcatel.  I say the wireless division needs to be kept by Alcatel because that is the only piece of Lucent that has any value to Alcatel.

Lucent can be sold off minus the wireless division because Lucent still has Bell Laboratories.  An American company can acquire the remaining pieces of Lucent plus Bell Labs and integrate them into its structure.  The American company I am thinking of that ought to acquire Lucent and its labs is Motorola.  Of course, Alcatel can always sell a chunk of Lucent to the Canadians.

My suggestion to Alcatel is to sell Lucent in two chunks.   I support a sale in two chunks for the following reasons.

For decades Motorola and Lucent have shared a common heritage.  Motorola and Lucent employees get along.  Even during the worse of the competitive battles the two companies in the wireless arena were still respectful of one another.  Motorola can integrate Bell Labs into its structure and use the intellectual property of the Labs to enhance existing Motorola products or create new products.  As for the wireline part of the business, sell that to Nortel.  Nortel and Lucent teams have also gotten along for years.  Do not forget that Nortel(:NT) and Lucent were both part of the original Bell System.  This common heritage also means the companies think alike and the employees should get along.

Both Motorola and Nortel are in deep trouble.  Both companies have motivated shareholders and bankers that need to think about how to salvage their companies.  Both companies likely share a set of common bankers and hence multiple mergers may be possible.  Both companies have shareholders that have the ability to close a deal and make it happen.  Lucent still has intellectual property and talent that can be integrated into Motorola and Nortel.

This is not going to be easy but if shareholders of Alcatel want to maximize the value of their shares a sale is necessary.  This is why restructuring is not done by investment bankers; they cannot look beyond the balance sheet.  Restructuring Alcatel-Lucent will be tough.

I know Russo wants to show she has a plan to fix the company.  However, it is too late.  The company is vastly underperforming. The issues regarding the employee base will not go away simply because the investors say they will.  Too much bad blood has been spilled between the two employee bases.  There has been no integration to date and nothing to date shows that the integration will happen.