& 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   >   >>
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
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 Interviews
MWC17: 5G, Cloud RAN & More

2|21|17   |   04:35   |   (0) comments


Ovum Senior Analyst Julian Bright talks to Scott Bicheno from Telecoms.com about all things MWC, including Cloud RAN, Huawei's pitch to the industry and the road to 5G.
LRTV Interviews
MWC 2017's Key 2-Letter Terms

2|20|17   |   08:29   |   (1) comment


5G, AI, VR... these are just some of the two-letter terms that will dominate show-floor chat at MWC 2017 in Barcelona, according to these two blow-hards (a.k.a. Scott Bicheno of Telecoms.com and Light Reading's Ray Le Maistre). And then there's PB...
LRTV Interviews
Key Trends for Mobile Operators in Developing Markets

2|20|17   |   06:37   |   (0) comments


Ovum's Matthew Reed talks to Scott Bicheno from Telecoms.com about the challenges and opportunities facing mobile operators in the developing markets of Africa and the Middle East.
LRTV Documentaries
YouTube Takes on Facebook Live-Streaming

2|17|17   |     |   (0) comments


Popular 'YouTubers' will be the first to get the new service on their smartphones. You have been warned.
LRTV Custom TV
Open Source NFV/SDN Automation

2|17|17   |   05:54   |   (0) comments


AT&T ECOMP (Enhanced Control, Orchestration, Management and Policy) code is transitioning into the Linux Foundation for placement into open source. In this video, Carol Wilson provides an update on the maturation of open source ECOMP and meets with industry leaders from AT&T, Bell Canada, Orange, Linux Foundation and Amdocs to discuss what this means for the ...
LRTV Documentaries
Uber & NASA Collaborate on Flying Car Project

2|16|17   |     |   (0) comments


Is Uber for real? Well, it's hired NASA engineer Mark Moore to lead the project, and he wouldn't come cheap.
LRTV Documentaries
Zuckerberg Tries Out the Oculus Rift VR Glove

2|15|17   |     |   (0) comments


Facebook CEO shows off a new way to interact with the Oculus Rift virtual reality headset: an Oculus glove.
LRTV Custom TV
Huawei Digital Transformation Forum 2017

2|10|17   |     |   (0) comments


Here's a preview of the upcoming Huawei Digital Transformation Forum taking place in Barcelona with trending telecom topics like cloud, IoT, 5G and much more!
Telecom Innovators Video Showcase
Dan Sahar of Qwilt on Open Edge Cloud Platform

2|8|17   |   08:38   |   (0) comments


Dan Sahar, Qwilt's co-founder, sits down with Steve Saunders of Light Reading for a conversation about Qwilt's Open Edge Cloud platform and the new role of service providers in application and content delivery.
LRTV Documentaries
ZeroStack's 'Self-Driving Cloud'

2|7|17   |   01:09   |   (0) comments


Its Z-Brain tech automates day-to-day management and long-term planning for hybrid clouds.
Telecom Innovators Video Showcase
Nominum's Craig Sprosts on DNS & Cybersecurity Trends

2|7|17   |     |   (0) comments


Nominum's Craig Sprosts talks about the fast-changing landscape of cybersecurity with Steve Saunders of Light Reading. Sprosts touches on the trend of the rise of ransomwares, rivals of IoT base attacks, and mobile network security. He also discusses the realization of the importance of IoT security after a recent cyber attack that paralyzed several major ...
LRTV Documentaries
China Moves Towards Mixed Ownership of Telcos

2|1|17   |   01:10   |   (0) comments


Chinese authorities are promoting new ownership models in order to raise capital.
Upcoming Live Events
March 21-22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
March 22, 2017, The Curtis Hotel, Denver, CO
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
T-Mobile CEO: M&A Coming but Not Quite Yet
Dan Jones, Mobile Editor, 2/14/2017
Is the Time Right for a Cisco/Ericsson Wedding?
Ray Le Maistre, Editor-in-chief, 2/17/2017
Nice to See at Least One CSP Taking My Advice
Mitch Wagner, Editor, Enterprise Cloud, 2/17/2017
Charter Launches 5G Field Trials
Mari Silbey, Senior Editor, Cable/Video, 2/16/2017
RSAC 2017 in 4 Words
Curtis Franklin, Security Editor, 2/17/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading founder and CEO Steve Saunders chats with Sportlogiq CEO Craig Buntin about sports data analysis.
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Animals with Phones
No One Likes This Click Here
Take a hint!
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.