& cplSiteName &

Alcatel/Lucent: The Domino Factor

Ray Le Maistre
3/24/2006
50%
50%

With Alcatel (NYSE: ALA; Paris: CGEP:PA) and Lucent Technologies Inc. (NYSE: LU) admitting to merger talks, questions arise about the implications of such a marriage on the rest of the telecom equipment segment. (See Lucent, Alcatel Rekindle the Flame and Lucent & Alcatel: Quigley or Russo?)

A combined Alcatel/Lucent would generate revenues of more than $25 billion a year, at current rates, and be a formidable competitor in just about every telecom segment, from the edge of the network all the way to a next-generation core. (See Alcatel Pays Up and Lucent Cuts 2006 Outlook.)

That includes mobile infrastructure, where Lucent is the market leader in CDMA equipment and Alcatel has built a position in GSM/UMTS. Combining the two would make for a major global player, says Patrick Donegan, senior analyst at Heavy Reading.

"From a wireless perspective, a combined Lucent and Alcatel would be a clear global number two behind Ericsson. It would be number one in CDMA and be approaching a 10 percent share in GSM, with strong momentum in the key emerging market opportunities. In W-CDMA it would have strong account presence in Cingular Wireless and Orange SA (London/Paris: OGE) as well as good prospects in China, Russia, and India. And it would also have a presence in WiMax," says Donegan. (See Lucent, Cingular Prep HSDPA and Alcatel Supplies Orange).

So what sort of impact might such a combination have on the equipment sector? Donegan reckons it could light a fire under some of the other vendors.

“Once one of these big deals is done, that could trigger others to happen a lot more quickly than is generally thought. The case for Nortel Networks Ltd. and Siemens Communications Group combining remains strong," says the analyst. (See Sources: Lucent, Nokia in Play for Siemens.)

Donegan believes vendor combinations that are strong in fixed and wireless, and which have significant footholds in European and North American carriers, make a lot of sense. And that could leave some of the other vendors vulnerable.

"As wireline and wireless networks begin converging, perhaps the greatest uncertainty surrounds Nokia Corp. (NYSE: NOK) and Motorola Inc. (NYSE: MOT) and whether they will look to commit further to the infrastructure market or else exit altogether,” he adds.

The list of companies affected by an Alcatel/Lucent combo doesn't stop there, with Cisco Systems Inc. (Nasdaq: CSCO), Ericsson AB (Nasdaq: ERIC), and Juniper Networks Inc. (NYSE: JNPR) all likely to consider their strengths and weaknesses in a new vendor world, while Chinese companies Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) could also come into play -- though few industry watchers feel Huawei is ready to open itself to greater financial scrutiny at present.

And there's one growth area that a combined Alcatel/Lucent might look closely at in terms of its future growth. Home networking, the equipment that sits in the broadband user's home, has grown in importance for carriers and vendors alike in the past 12 to 18 months, though Alcatel has made an investment in one of the home gateway sector's leading lights, 2Wire Inc. . (See Alcatel Buys Into 2Wire, Cisco to Acquire Scientific-Atlanta, BB Forum: Gateway Goals for Carriers, and IP Video: In the House.)

— Ray Le Maistre, International News Editor, Light Reading

(30)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 3   >   >>
digits
50%
50%
digits,
User Rank: Light Beer
12/5/2012 | 4:00:21 AM
re: Alcatel/Lucent: The Domino Factor
There appear to be a number of options for some of these companies -- Cisco keeps growing through incremental acquisitions.

It could also increase the squeeze on Tier 2 vendors that could become increasingly exposed by megavendors.
chip_mate
50%
50%
chip_mate,
User Rank: Light Beer
12/5/2012 | 4:00:20 AM
re: Alcatel/Lucent: The Domino Factor
How many times has a company acquired the assets of another struggling company and incorporated their name?
Never.

Name remains the Same.

Alcatel
chip_mate
50%
50%
chip_mate,
User Rank: Light Beer
12/5/2012 | 4:00:20 AM
re: Alcatel/Lucent: The Domino Factor
They had a massive stroke in 1999, and have been in ICU since.

This company should have been put down long ago.
Amazing how it took the French to come in and do it in 2006.

Can't wait to see the French sweep out all the Lucent politicos who won't have a place at the ALA table.
I can't think of ONE major American city where Alcatel doesn't already have ENOUGH of their own people.
reoptic
50%
50%
reoptic,
User Rank: Light Beer
12/5/2012 | 4:00:19 AM
re: Alcatel/Lucent: The Domino Factor
does not make them float.

Bottom line is that Cisco and Huawei enjoy strongest strategic positions in this market and everyone else stuck in the middle.

Looks like the airline industry. All the mergers can't make big guys competitive with JetBlue and Southwest.
jerph2000
50%
50%
jerph2000,
User Rank: Light Beer
12/5/2012 | 4:00:15 AM
re: Alcatel/Lucent: The Domino Factor
For those who do not remember, talks between Alcatel and Lucent already occured in 2001.
http://www.lightreading.com/do...

It did not happen then and I would be surprised if it does happen today. The only reason why I would see Lucent agreeing to Alcatel's terms for a friendly merger is that they fear an hostile take-over on the stock-market from other companies that woudl have more dramatic consequences for the company and the employees.
trzwuip
50%
50%
trzwuip,
User Rank: Light Beer
12/5/2012 | 4:00:15 AM
re: Alcatel/Lucent: The Domino Factor
Alcatel should not allow the boat anchor LU to join them and ruin what has otherwise been a good comeback by ALA. The only thing attractive to ALA has to be the Wireless Infrastructure Business where traditionally Alcatel has been a non-starter. Maybe VZ and T are talking Alcatel into taking this dog because they have so much invested...
chip_mate
50%
50%
chip_mate,
User Rank: Light Beer
12/5/2012 | 4:00:13 AM
re: Alcatel/Lucent: The Domino Factor
jerph:
"It did not happen then and I would be surprised if it does happen today. The only reason why I would see Lucent agreeing to Alcatel's terms for a friendly merger is that they fear an hostile take-over on the stock-market from other companies that woudl have more dramatic consequences for the company and the employees."

Couple things have changed.
First the 2001-2 management is gone and secondly, the 2006 management does NOT believe they are in the drivers seat on this deal. They are more honest in their self realization (not smart, or saavy, just honest when they look at their crushing numbers and chances for an escape)
fgoldstein
50%
50%
fgoldstein,
User Rank: Light Sabre
12/5/2012 | 4:00:09 AM
re: Alcatel/Lucent: The Domino Factor
chip> How many times has a company acquired the assets of another struggling company and incorporated their name?
Never.

Uh, AT&T?

Indeed, my former employer's name, Arthur D. Little, was purchased at a bankruptcy auction by a French company, Altran, who uses it for some of its activities.

Brand equity can be bought. On the other hand, Lucent's brand is rather new and already somewhat tarnished.
ATMRules
50%
50%
ATMRules,
User Rank: Light Beer
12/5/2012 | 4:00:08 AM
re: Alcatel/Lucent: The Domino Factor
I smell the blood of a Frenchman.....If this deal does go thru, it will be interesting to see what the body count will be within 2 years of deal being completed. Anybody care to guess?

IP will never have the QOS OF ATM!!!!!!!!!!!!!!!!


jerph2000
50%
50%
jerph2000,
User Rank: Light Beer
12/5/2012 | 4:00:07 AM
re: Alcatel/Lucent: The Domino Factor
A company's name can be a blueprint of industrial history in itself. Alcatel is a good example in addition to the AT&T/Bell example that everybody knows in the US. The history of the name Alcatel is less known but nonetheless capture some of the history of the 20th century European industry.

The name ALCATEL comes originally from a company in Alsace region in France: ALsacienne de Construction Atomique, de Telecommunications et d'ELetronique. Are you still there with me? Ok. The name ALCATEL survived multiple M&A and acquisition. Here is a sumamry:
- CGE (equivalent of GE and Siemens in France) acquired ALCATEL after WW2 in the 60's
- The telecom part of the CGE called CIT-ALCATEL merged with Thomson Telecommunications in the 80's. The new Telecommunication entity part of CGE (controlled by teh French government) was named ALCATEL
- CGE became ALCATEL-ALSTHOM in the 90's when the French Government sold its majority share and the current CEO (Tschuruck) took over.
- ALCATEL (Telecom) and ALSTHOM (trains, etc) were split and traded separately in 1998

Is a new chapter in the writing? It is interesting to know that Mr. Tchuruk worked a long time in the US in the oil industry prior to his coming to Alcatel. He completed the transformation of the company, started by the previous CEO, into a truly global company with English as the official language.

The only brand within Lucent that the merged company would care about is the label "Bell Labs". If the merger were to go through, which I don't think it will, I could see the new company taking the title ALCATEL (surviving once more a M&A) and renaming the whole technology group Bell Labs.

Page 1 / 3   >   >>
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, October 5, 1:00PM EDT
Gigabit & Smart Cities
Joe Kochan, COO & Co-Founder, US Ignite
UPCOMING COURSE SCHEDULE
Friday, October 7, 1:00PM EDT
Gigabit & DOCSIS 3.1
Ty Pearman, Director, Access Architecture, Comcast
Wednesday, October 19, 1:00PM EDT
Securing a Virtual World
Rita Marty, Executive Director, Mobility and Cloud Security, Chief Security Office, AT&T
Friday, October 21, 1:00PM EDT
Security: Evolving the Data Center
Rasool Kareem Irfan, Head, Telecom & Infrastructure Security Practice, Tata Communications Transformation Services Ltd (TCTS)
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Documentaries
From Philly, With Love

9|30|16   |     |   (0) comments


Join Alan Breznick, cable's answer to the Italian Stallion, as he runs through the highlights of SCTE Cable-Tec Expo, lumbers along in Rocky Balboa's footsteps and searches for the perfect Philadelphia cheesesteak.
LRTV Interviews
CenturyLink: SD-WAN Customers Looking for Value Not Cost Savings

9|30|16   |   5:31   |   (0) comments


At NFV & Carrier SDN in Denver, CenturyLink's Eric Nowak told Light Reading that when customers launch SD-WAN, they aren't necessary looking to save money, but instead they are looking for more value from what they're spending. He also shared some unique case studies and lessons learned from launching SD-WAN services.
LRTV Custom TV
Flexible Deployment Approaches for the Gigabit Services Evolution

9|29|16   |     |   (0) comments


For many operators, the gigabit evolution begins with the shift from DOCSIS 3.0 to DOCSIS 3.1. But that move represents a change not only in the protocol itself, but in the approach to architecting their entire DOCSIS delivery chain -- from the headend to the outside plant and home gateway components.

Jonathan Ruff, senior director of global technical ...

LRTV Interviews
Level 3 VP: Enterprises Need More for Less

9|29|16   |   05:27   |   (0) comments


Andrew Dugan, Level 3 group vice president of global technology and IT, says enterprises need more bandwidth and they need it faster and with greater security, but they want to spend less, if possible. They are looking to carriers to reduce their network complexity and help protect them from cyberattacks as well.
LRTV Interviews
CenturyLink: SDN/NFV Pose New Interconnection Possibilities

9|28|16   |   04:37   |   (0) comments


Network operators should develop new APIs and business processes for reselling virtual assets to each other, says CenturyLink's Bill Walker. That will enable them to build digital business portfolios that help them avoid becoming commodity transport providers.
LRTV Interviews
Level 3: Overcoming Terror of Being Supplier, Integrator & Developer

9|28|16   |     |   (0) comments


At Light Reading's NFV & Carrier SDN event in Denver, Travis Ewert of Level 3 Communications said there is terror in becoming supplier, integrator and developer, but it can be overcome and be cost effective.
LRTV Custom TV
Introducing IoT World News

9|27|16   |   01:43   |   (0) comments


Self-driving cars, medical sensors, smart cities... and refrigerators. In order to address the huge scope of IoT, KNect365 has created a unique online community that will help businesses to understand and monetize the opportunities that live within the IoT market. We look forward to welcoming you to IoT World News -- your gateway to a better connected future.
LRTV Interviews
AT&T: Reusable Functions Next NFV Key

9|27|16   |   06:03   |   (0) comments


The next generation of NFV has to break functions down into reusable software chunks, making everything much more cloud-like.
LRTV Interviews
Masergy on Security: Attackers Gaining Upper Hand

9|27|16   |   5:10   |   (2) comments


At Light Reading's NFV & Carrier SDN event in Denver, Ray Watson, vice president of Global Technology at Masergy, says that because of the growth in virtualization, the threat landscape is shifting in favor of the attackers. As a result, service providers need to think beyond just defending the perimeter and take a more holistic approach to security.
LRTV Interviews
Verizon Takes Next Step on Biz Virtualization Journey

9|26|16   |   4:38   |   (2) comments


At September's NFV & Carrier SDN event in Denver, Light Reading sat down with Victoria Lonker, director of Product and New Business Innovation at Verizon, to chat about where the carrier is with delivering virtualized services to business customers.
LRTV Interviews
Global Services: The $40B Face-Off

9|26|16   |   05:53   |   (1) comment


More service providers than ever before are battling it out to win a slice of what is now a $40 billion global communications services pie, explains Ovum Principal Analyst David Molony.
LRTV Documentaries
MEC Congress: The Key Takeaways

9|22|16   |   03:25   |   (3) comments


Three key takeaways from the Mobile Edge Computing (MEC) Congress in Munich, Germany.
Upcoming Live Events
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Eurobites: Telefónica Taps Juniper for Network Security
Paul Rainford, Assistant Editor, Europe, 9/26/2016
Powell Kills the Cable Show
Mari Silbey, Senior Editor, Cable/Video, 9/29/2016
Telstra Sees Quadrupled Data Capacity by 2020
Carol Wilson, Editor-at-large, 9/28/2016
Open Source Getting on My Nerves
Carol Wilson, Editor-at-large, 9/26/2016
Google, Facebook Gaining Network Equipment Clout
Patrick Donegan, Chief Analyst, Heavy Reading, 9/26/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
There's Nothing Like Missing a Full Minute of Pokémon Go Click Here
Live Digital Audio

A vital part of increasing the number of women in comms is transforming the ways companies can support and empower women. While progressive company policies that support both men and women in achieving work-life balance are a step in the right direction, creating a company culture that supports those policies can at times be more challenging.

During this show, we'll talk to Lynn Comp, Senior Director of Industry and Sales Enabling (ISE) in the Network Platforms Group at Intel, about why those challenges exist and how companies can overcome them. She'll provide insight into how Intel has worked to create a culture that supports work-life balance, and provide steps and guidance for other companies wishing to do the same. We will also leave plenty of time to get your questions answered live on the air.