Lucent Dumps Enterprise Services
Lucent will keep its service-provider consulting and professional services group.
Details of the deal between Lucent and West Coast Venture Capital LLC, the venture firm buying the services group, were not disclosed.
Lucent purchased International Network Services, which formed the basis of the group, back in 1999 for approximately $3.7 billion. Several months ago it announced its intention to sell off the group, but the sale has taken some time to go through.
"It's a good idea for them to sell off this part of the business. They need to focus," says Steven Levy, an analyst with Lehman Brothers. "But I'd like to see what the proceeds are." Levy speculates that the sale price of the enterprise services business is nowhere near what Lucent originally paid for it. But neither company is providing information about what specifically was sold to West Coast Venture Capital.
Lucent has experienced eight quarters in a row of net losses, recording $16 billion in losses for fiscal 2001 (see Can Lucent Make It?). In an effort to cut costs and refocus the company, Lucent has canceled product lines and discontinued divisions within the company, eliminating half its workforce (see Lucent Bags High-End Switch and Lucent Ditches Chromatis). It expects to have roughly 50,000 employees by September, versus the nearly 100,000 employees it reported worldwide back in 2000 before the restructuring began.
This means primarily focusing on service provider customers as opposed to enterprise customers. In 2000, Lucent spun off Avaya Inc. (NYSE: AV), a former unit that serves the enterprise sector. It recently completed the spinoff of Agere Systems (NYSE: AGR), Lucent’s old Microelectronics Division, so that it could focus on system-level products (see Lucent Sets Agere IPO Date). The company also sold off its fiber business in November of 2001 (see Lucent Cuts Deal on Fiber Unit)
"This announcement marks another piece of Lucent's strategy to focus its products and portfolio on the world's largest communication service providers," said Bill O'Shea, Lucent's executive vice president for corporate strategy and marketing in a prepared statement.
As part of its agreement with West Coast Venture Capital, the enterprise services division will retain its existing management team upon completion of the sale. David Butze, president of Lucent's division, will become president and CEO of International Network Services Inc. (INS), the new wholly owned subsidiary of West Coast Venture Capital.
Lucent’s stock ended the day at 1.50, down 0.01 (0.66%).
— Marguerite Reardon, Senior Editor, Light Reading