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Optical/IP

Lucent Takes the Gloves Off

Lucent Technologies Inc. (NYSE: LU) is getting scrappy, clawing its way back into some incumbent business, to judge from some recent activity.

Lucent has won two telecom equipment deals in recent weeks, a metro optical networking whopper with Verizon Communications Inc. (NYSE: VZ) and a smaller digital loop carrier contract with Bell Canada. Lucent hasn't announced or commented on either deal, but the news signals that despite its ongoing reorganizing, the telecom giant is serious about pricing to win and hitting up large carriers for more business.

The first new deal is said to be a three-year agreement for Lucent to provide Verizon with metro optical networking gear, according to two industry analysts close to Lucent. The deal is a significant win for Lucent, though its value is hard to pin down. An earlier report by TheStreet.com put the contract as high as $1 billion. Light Reading's sources say it could be as low as $100 million or as high as $500 million.

"You didn't get a comment from us last week and you're not going to get one this week, either," said Wendy Zajack, a Lucent spokeswoman.

Whether Lucent talks or not, a deal between it and Verizon is hardly surprising, given the two companies' close relationship. Sales to Verizon accounted for about 17 percent and 14 percent of Lucent's revenues in the years ended September 30, 2001 and 2000, respectively.

Earlier this year, Verizon bought Lucent's WaveStar TDM gear for a network deployment in metropolitan New York. That buildout also included Lucent's OC3 (155 Mbit/s) and OC12 (622 Mbit/s) Sonet add/drop multiplexers.

More surprising was a recent revelation that Lucent has beaten Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI) and Alcatel SA (NYSE: ALA; Paris: CGEP:PA) in a contest to provide digital loop carrier equipment to Bell Canada. That deal was revealed by the analysts at Deutsche Bank, who cited sources at Bell Canada in a note to clients last week. Analyst George Notter, the report's primary author, writes that the deal is estimated to be between $30 million and $45 million annually.

The analyst note also mentioned an anecdote that Lucent recently knocked 50 percent off the price of its Stinger DSLAMs in order to get Bell Canada to consider giving it some of the DSLAM business it had been giving Alcatel.

While the progress with big carrier customers is a positive for Lucent, the price slashing may only irritate investors who worry that Lucent's profit margins are dropping too fast.

Lucent shares were down $0.20 (2.56%) to $7.61 in early afternoon trading Wednesday.

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
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Daveman 12/4/2012 | 7:26:58 PM
re: Lucent Takes the Gloves Off I know many ex-Lucent staff who were FMP'd in the last 12 months. I don't know what you're talking about but they are sure that Lucent has done some significant cutting... Didn't Henry say at the last conference call that the force reduction will be complete this January. The numbers published were that at the end of Phase II Lucent would have 65,000 employees. This is down from 120,000+.... So what exactly are you talking about?
manoflalambda 12/4/2012 | 7:26:58 PM
re: Lucent Takes the Gloves Off The real problem with Lucent is being overstaffed to the tune of about 30%. Lucent has not yet implemented the workforce reduction it announced earlier. It s inability to reduce the workforce is cosing almost a billion dollars year.

Hmmm. Currently 77000 people (9/30 iirc). Target 57-62000 (prob includes Agere and OFS-Fitel off role at that time). Cuts in Indian Hill and elsewhere recently.

Harvey, what would your target number be?

Salute,
Manoflalambda
optigirl 12/4/2012 | 7:26:58 PM
re: Lucent Takes the Gloves Off One of the things that might happen here is that Lucent sells the stuff at cost, which locks other companies out of the account and then turns around and sticks it to the customers on servicing revenues. (See IBM)

You don't have to be the best, just the biggest. It also helps when you are part of the ol' boy network and everyone has known each other for years. LU and NT know the operations side of the house and since there is such a large embedded base anyway, they will get a seat at the bargaining table no matter what.

Combine all of this with lowered expectations, firing tens of thousands of employees and you can do it the Lucent way....


}:-(
gea 12/4/2012 | 7:26:57 PM
re: Lucent Takes the Gloves Off Harvey! (Or should I say "Gollum"?)
You who are so glum, and seeing crappy technology and conspiracies everywhere...you really believe that Lucent is somehow the hands-down winner in terms of ALL telecom technology?

Sorry dude...I've had my hands on the OLS-40G, as well as the Ciena 1600/SENTRY as well as the Pirelli/Cisco stuff and more. I'll grant that the OLS-40G is old, but it was no more reliable than anybody else's gear. In addition, while doing a field trial of the OLS 40G in conjunction with an RBOC, 3 engineers tried to correctly pad the optical channels using the "Smart Pad" feature, and none of them were succesful. The OC-48 wavelengths had shitty BERs after other channels dropped out. So it never really worked great in the first place.
None of the other vendors I've seen had that problem.

Ya' know, Harvey...you really sound like quite a kook. Do you really think you are doing your company a favor by bashing everyone else's gear like you do? And then praise Lucent in a way that has no qualifications or exceptions technology-wise?
manoflalambda 12/4/2012 | 7:26:57 PM
re: Lucent Takes the Gloves Off Oops :)

77000 excludes Agere but includes OFS-Fitel.
(See the PDFs at Lucent.com,
http://www.lucent.com/investor... )

Salute,
Manoflalambda
optigirl 12/4/2012 | 7:26:55 PM
re: Lucent Takes the Gloves Off I have to wonder if Harvey is just someone who sits around all day writing up semi-literate posts just to create chatter.

It's not like he ever contributes anything meaningful or intelligent and he never responds to anything anyone says to him.

Is he a LR plant just to get people posting???

Inquiring minds wanna know!!!

:-)

flanker 12/4/2012 | 7:26:55 PM
re: Lucent Takes the Gloves Off You didn't get a comment from us last week and you're not going to get one this week, either," said Wendy Zajack, a Lucent spokeswoman.


She's definitely a graduate of Dale Carnegie's <font color="#FF0080" face="Verdana">HOW TO WIN FRIENDS AD INFLUENCE PEOPLE
</font>
three day mega-course.





Litewave 12/4/2012 | 7:26:51 PM
re: Lucent Takes the Gloves Off Author: optigirl
[About Harvey Mudd]
...It's not like he ever contributes anything meaningful or intelligent and he never responds to anything anyone says to him...


Too true!

If hes not a plant, hes got the thickest skin of anyone I've experienced!

nag_e_n 12/4/2012 | 7:26:48 PM
re: Lucent Takes the Gloves Off Can anybody tell me if the optical gears does support the services like IP.I want to know awhat is optical Ethernet?
Confucius 12/4/2012 | 7:26:47 PM
re: Lucent Takes the Gloves Off If hes not a plant, hes got the thickest skin of anyone I've experienced!

Skull. Not skin.

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