As Lucent Technologies Inc. (NYSE: LU) finalizes its merger with Alcatel and its power center shifts to Paris, Lucent Technologies Inc. will, from Thursday, cease to exist.
Lucent executives will likely argue that with Lucent CEO Patricia Russo taking the helm of the new company, Lucent isn't going away at all. But semantics aside, it will put to an end the independent operation of one of North America's oldest telephony technology companies.
Lucent has its roots in one of the oldest telephone companies -- Western Electric -- which was founded in 1869 and later became part of AT&T. These assets ended up becoming part of AT&T's technology arm, including what is now Bell Labs, which were spun off in the mid-90s when AT&T was broken up. Lucent's culminating moment as an independent company came with its IPO in 1996, at the beginnings of tech-bubble fever. Its profits and stock price would skyrocket with the rise of the telecom balloon. Several years later, Lucent would hit an abyss after regulators and investors uncovered accounting irregularities and billions of dollars in losses, forcing the company to fire former CEO Rich McGinn and begin a long process of restructuring. Lucent would end up having less than a third of the employees it had at the time of its IPO. (See Lucent Supernova, McGinn: McGone, Lucent Shares Hammered by $125M Goof, Lucent Loses $1 Billion, Plans Big Layoff, Lucent's Next Leader, Lucent Cuts Retiree Healthcare, Schacht Faces Retiree Wrath.)
Lucent's status as an American business icon can't be underestimated. Its technology is ubiquitous in U.S. telephone networks. And its financial impact may be even more ubiquitous -- because shares of Lucent, deriving from the AT&T spinoff, are some of the most widely owned investment shares in the world.
Just yesterday, for example, 109.3 million shares of Lucent changed hands on the New York Stock Exchange (NYSE) , making it the most active issue of the day (as it frequently is). The shares are held by thousands of institutional funds, including some of the largest pension funds in the industry.
So what happens now that we have the Paris version of Lucent?
Today – Thursday, November 30 -- as Lucent Technologies Inc. (NYSE: LU) closes its merger with Alcatel (NYSE: ALA; Paris: CGEP:PA), the Murray Hill, N.J., company will cease to exist as a corporate entity, and its CEO, Pat Russo, will take the helm at the world's largest single telecom vendor, Alcatel-Lucent. Friday, December 1 is the new company's first day of trading. (See Bush Approves Alcatel Lucent and US to Watch Alcatel Lucent.)
We asked a selection of industry people whether this marked a sea change in the telecom industry, and the impact Lucent had during its relatively short lifetime. Here is what they had to say.
Frank Dzubeck, Communications Network Architects
Analyst Dzubeck, president of Communications Network Architects, says Lucent has been "a great company, and I'll be sorry to see it go. They've been great fun."
In what way? "Investment bankers say this industry is lumpy. Lucent is the epitome of lumpy. It's the company everyone looked at in terms of this industry's rollercoaster ride. It's had its great highs and deep lows. Tremendous success with blow out quarters, wireless data breakthroughs, Nobel prizes for Bell Labs -- but then it's had scandal. Like with Rich McGinn." (See Bell Labs Makes Molecular Transistor and McGinn: McGone.)
Dzubeck concludes: "Lucent has had every degree of success and every degree of failure. It nearly went out of business. But along the way it's been an extremely admirable competitor to a lot of other big companies, though those firms would never admit it."
But the end of Lucent in itself does not mark a sea change in the industry, he says. "This is just a continuation of the way the industry is going. The entire sector is collapsing down to economies of scale, with a few big guys and the small pockets of specialist startups."
Stan Lumish, CTO, JDSU
“The impact that Lucent and Bell Labs have had on the optical communications industry is immeasurable,” says JDSU (Nasdaq: JDSU; Toronto: JDU)'s CTO Stan Lumish. “Bell Labs stood apart from any entity in the world due to its success at attracting the best and brightest from the top universities around the globe. The number of patents, cited papers, awards and Nobel prizes that can be attributed to the innovation of Bell Labs remains impressive. One hopes that, under the new leadership, this resource will continue to thrive.”
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