Lucent Dumps Enterprise Services

Lucent Technologies Inc. (NYSE: LU) today announced that it would be selling off its enterprise services business to a California-based venture capital firm.

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
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let-there-be-light 12/4/2012 | 10:09:53 PM
re: Lucent Dumps Enterprise Services Why don't they dump something that would really make a difference, like the people responsible for this sad state of affairs? It would not only save a lot of money, but probably ultimately save the company.

Those INS guys are smart. They saw through the whole "innocent LUcy" show from the beginning and refused to play along. Even worse (from LU's perspective), they refused to stick their heads where the sun don't shine. Very unacceptable behavior.

No wonder LU couldn't wait to get rid of them as soon as possible. Who cares what the losses were? Billy doesn't seem to.
obkenobi 12/4/2012 | 10:09:49 PM
re: Lucent Dumps Enterprise Services They weren't that bright.

You can't be bought by Lucent, go to a Lucent customer site in a Lucent Logo shirt and complain to the customer what they should have done was bought Cisco.

Unless it involved cisco, they couldn't fight their way out of a wet paper bag.

Vendor agnostic my arse.
USA 12/4/2012 | 10:09:49 PM
re: Lucent Dumps Enterprise Services I could never figure it out why Lucent would buy a firm with the most CCNEs of any company in the US. It seemed pretty stupid at the time. I guess it just took them a while to figure that out.

Another LUdicrous idea.
laserbrain 12/4/2012 | 10:09:49 PM
re: Lucent Dumps Enterprise Services paid $3.7 bil for 2500 Cisco engineers.
sold for less than $100mil (guess)

f'n brilliant.
jj388 12/4/2012 | 10:09:46 PM
re: Lucent Dumps Enterprise Services Anybody know if the remnants of INS will be taking the Vital Suite product with them? That product was absolutely fabulous, and sadly was tossed into the bottomless pit of disastrous management products at Lucent, run by a gang of bunglers.
dowdog 12/4/2012 | 10:09:45 PM
re: Lucent Dumps Enterprise Services This is a great day for INS to finally get rid of the single worst company out there in telecom.

All odds on INS to outperform (from a profitability standpoint) than that of Lucent.

As far as LWS, good luck!!
BobbyMax 12/4/2012 | 10:09:45 PM
re: Lucent Dumps Enterprise Services Lies. lies and more lies. Before Lucent embarked on acquisitions of junky companies, Lucent was completely focused on meeting the needs of service providers everywhere in the world. AS far as I know there was not a single area of networking in which Lucent did not have expertise. There are outstanding scientists and engineers trained at the most prestigous institutions.

The company so much experience that they could have switches and routers within 6-8 months. Why would they buy junky companies like OCtel, Spring Tide, Ascend Communication, and some junk from Cisco with Certified Network Engineers. They also acquired companies like Chromatis,Nexabit, Yurie Networks, and many other junky companies. Lucent not only acquired junky companies, it also got junky employees from these acquired companies. Many of these companies were ethnic companies run by a group of people from third world countries. The companies that brought devastation to Lucent were located in California, a warning sign Lucent ignored. California has all trappings of a third world country, its products and technologies cannot be trusted.

Lucent also hired a lot H1-Visa contractors that further dragged the company. The management people who perpetuated fraud on Lucent are still on the payroll.

Lucent has been totally honest in cleaning up the house. One robbers after the other come and go with tremendous amount of loots. I am referring to the upper management at Lucent.

Even with 50,000 employees the company remains mismanged. The company is giving so many grounds to other companies. With its current workforce, the company can successfully in Enterprse Networks and Storage Networks.

There is no need to waste resources except making products and doing a good job of marketing.For this to happen, many marketing people need to fired gradually.

Lucent should also listen to shareholders and motivate its employees to work hard and productivily.
lucender 12/4/2012 | 10:09:45 PM
re: Lucent Dumps Enterprise Services Maybe Lucent should forget about technology and stick to real estate. They only purchase they've made money on in the last few years was the golf course, right?
reoptic 12/4/2012 | 10:09:44 PM
re: Lucent Dumps Enterprise Services Your comments border on rascist in your references to ethnic groups. The fact is Lucent couldn't and still can't spell data, and lost all the sales and marketing folks in these acquisitions that did.
laserbrain 12/4/2012 | 10:09:43 PM
re: Lucent Dumps Enterprise Services >Anybody know if the remnants of INS will be taking the Vital Suite product with them? <

nope. that stays.
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