Analysis: What Is Alcatel Getting From Lucent?

What will Alcatel get in the way of technology for the $13.4 billion it is spending to acquire Lucent Technlogies?

April 5, 2006

2 Min Read
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What will Alcatel get in the way of technology for the $13.4 billion it is spending to acquire Lucent Technlogies?

In spite of Lucent's decaying reputation in recent years, one longtime communications specialist, Joe Nordgaard, managing director of Spectral Advantage, believes Lucent has several important assets that will be attractive to the French acquirer.

"I think Lucent's strength in wireless is the most prominent and valuable piece of Lucent," said Nordgaard in an interview this week. He said Lucent's strength in CDMA2000 and UMTS – key technologies in the still-emerging 3G universe – will be useful to Alcatel.

Nordgaard noted that Lucent is well positioned in both China and India, too, to take advantage of those 3G technologies as they come in market in future years.

"But Lucent will be valuable in the U.S., too," he said citing the upcoming 2100 MHz auctions that are slated to take place in the U.S. "Lucent can be the hometown supplier here; France's Alcatel can't."Nordgaard, who worked at Lucent for more than two decades, said the former AT&T unit is also strong in IMS (IP multimedia subsystem), the IP-based flexible switching system platform that is beginning to take off.

In announcing the acquisition – the companies are calling it an equal-partner merger – the combination will be named later. Lucent's current chairman and CEO, Patricia Russo, will move to Paris to direct the integration.

"The communications industry is at the beginning of a significant transformation of network technologies, applications and services – one that is projected to enable converged services across service-provider networks, enterprise networks and an array of personal devices," said Russo in a statement.

"This presents extraordinary opportunities for our combined company to accelerate its growth."

Alcatel's current chairman and CEO, Serge Tchuruk, will become non-executive chairman of the combined company.The company said the combination is expected to achieve savings of $1.7 billion within three years. No announcement was made about potential job layoffs.

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