Lucent Shares Rise on Deal Talk

If it's Monday there must be a new Lucent Technologies Inc. (NYSE: LU) rumor circulating.

Lucent's shares spiked this morning -- rising nearly 20 percent, or $0.28 to $1.79 -- on renewed hopes it could find some sort of partner that would either aquire part of its business or buy the company outright.

The latest Wall Street buzz says that long-rumored talks between Lucent and defense contractor General Dynamics (NYSE: GD) have reached a more serious stage. These rumors, as well as others, have now been circulating for some time. Another theory has Lucent talking to giant conglomerate General Electric (NYSE: GE). But many sources remain highly skeptical of such talk.

Indeed, a possible combination with a large defense contractor, General Dynamics, raises more questions than it answers. The only connection might be a few of Lucent's relatively small government contracts.

"That doesn't make any sense at all to me," says Tim Krasky, a partner with YankeeTek Ventures. "Why would GD want to buy a company with so many problems?"

"They've talked to GD about various things for years, but it's always been about little things," says one hedge-fund manager, asking to remain unnamed. The source said that this morning Wall Street players were circulating rumors that the companies had entered a due-diligence stage. "But I don't think it's true."

Despite the skepticism about such deals, there was enough firepower on Wall Street to lend the talk credibility. Lucent shares have nearly doubled in the last two weeks, since Light Reading reported rumors that investment bankers were circling the company's ATM switching business (see Cisco, Sycamore Circling Lucent's ATM).

Meanwhile, talks with Cisco Systems Inc. (Nasdaq: CSCO) and Sycamore Networks Inc. (Nasdaq: SCMR) about Lucent's Westford, Mass., unit have hit a snag, confirm several sources. The problem with the deal is simple: Lucent wants more money than anybody is willing to pay. Cisco and Sycamore are said to be interested in buying the unit for $200 million to $300 million; Lucent wants more like $800 million, say sources close to both companies.

Despite the fact that Lucent has yet to find its match, the company is motivated by its need to further downsize and its thirst for cash, and many expect it to make some sort of move to either sell assests for find a buyer.

Both General Dynamics and Lucent declined to comment for this article.

— R. Scott Raynovich, US Editor, Light Reading Want to know more? The big cheeses of the optical networking industry will be discussing multiservice switches at Lightspeed Europe. Check it out at Lightspeed Europe 02.

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ivehadit 12/4/2012 | 9:17:48 PM
re: Lucent Shares Rise on Deal Talk lightreading keeps churning its rumour mill. it discards some rumours it generated (sale of atm business) and generates new ones (general dynamics!).

the stock is rising because the market see's optimism in telecom 6-9 months away. the market doesn't see any reason to discount lucent over nortel, so lucent is up a little more. by the way, everybody's up,including nortel and ciena. hasn't LR noticed?

scotts daydreams are getting wilder. amazing this garbage gets headline billing at lightreading (which i do like for a lot of other reasons). this article doesn't even try to glue the facts together.
dwdm2 12/4/2012 | 9:17:45 PM
re: Lucent Shares Rise on Deal Talk I found the following clip about LU and SUNW:

Lucent, Sun Microsystems to Expand Alliance

Lucent Technologies Inc. (LU) and Sun Microsystems Inc. (SUNW) expanded their business product-development and sales alliance to target service providers and business customers in Asia, Europe and Latin America, in addition to those in North America.
Financial terms and earnings projections aren't being disclosed, a Lucent spokeswoman said.

In a statement Monday, Lucent and Sun said they are pursuing joint sales of their products for IP Centrex central office phone systems, customer relationship management, network management, mobile high-speed data systems, unified communication messaging systems, and business continuity systems.

"Our work with Sun is just one example of how Lucent is executing on its strategic initiative of teaming with alliance and channel partners around the world to reach new markets and customers. We intend to use our success here to springboard to other opportunities and grow revenue in this part of our business," said Lucent Vice President Frank Farese said in a written statement.

Sun representatives weren't immediately available for comment.

-Nora Devine; Dow Jones Newswires; 201-938-5388

Copyright (c) 2002 Dow Jones & Company, Inc.
All Rights Reserved

BobbyMax 12/4/2012 | 9:17:45 PM
re: Lucent Shares Rise on Deal Talk I do not even want to entertain any thoughts that General Dynamics would acquire Lucent Technologies. This idea sickens me to death. It is hard for me imagine that General Dynamics would be able to understand and manage Lucent Technologies. Moreover, it is beyond the financial capability of General Dynamics to acquire Lucent.

I think certain companies like Cisco are bent upon destroying Lucent so that they can freely steal its technology and customers.

Lucent/Bell Labs is the most important icon of our country and as such it should not be allowed to be drowned.

The Federal Government should loan about $30 Billion (interest free) so that the company can shine again. Once Lucent disintegrates, our countery would cease to be the technology power house we are.
fiber_r_us 12/4/2012 | 9:17:45 PM
re: Lucent Shares Rise on Deal Talk bwahahahaha....
manoflalambda 12/4/2012 | 9:17:43 PM
re: Lucent Shares Rise on Deal Talk ...being repriced on or about today. The cynical would point to some pump and dump to continue to screw the few remaining...

fhe 12/4/2012 | 9:17:43 PM
re: Lucent Shares Rise on Deal Talk and the stock goes up 20%?

While individual investers spread rumors and end up in jail?

To me, Wall Street is as crooked as before, or maybe even worse. No matter how many new rules there are...
kampar 12/4/2012 | 9:17:43 PM
re: Lucent Shares Rise on Deal Talk
Alternatively, the $30Bn could be used to buy a significant amount of weapons and munitions from a certain "General Dynamics". Which one do we all think would be first in line for the cash at this particular point in time?

Answers on a postcard please ...
mma 12/4/2012 | 9:17:42 PM
re: Lucent Shares Rise on Deal Talk General Dyamics already bought a piece of Lucent in '97.

From eeTimes "Lucent sells undersea-defense unit"

"CHURCH FALLS, Va. -- General Dynamics Corp. last week agreed to purchase the Advanced Technology Systems (ATS) unit of Lucent Technologies Inc. The unit develops surveillance and signal-processing equipment for underwater defense operations, making it an interesting fit for nuclear-sub maker General Dynamics."

When Lucent closed the metro DWDM development lab in Raleigh last year, some of the staff went to General Dynamics.
TheChief 12/4/2012 | 9:17:42 PM
re: Lucent Shares Rise on Deal Talk Bobby do you know anything about GD. The are older than Lucent/Bell Labs so a profit and postive cash flow. The DO have the financial capability to purchase Lucent and Lucent would seem to be a good fit in their Information Tech division.

OBTW. Why should the Feds give any failing company a loan. No telecom, airline, or other company should get a loan from the Feds. Please quote the section of the constituation that would authorize such a loan.
Jo_ho_ho 12/4/2012 | 9:17:34 PM
re: Lucent Shares Rise on Deal Talk How about if we save a few AMERICAN companies---does that work, or should we piss off more time and money on the so-called "global economy"?

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