Russo: Lucent's Getting Steady
The excess network capacity built in the late 1990s and 2000 is "working its way out, thanks to increasing voice and data usage, and the market will recover slowly as carriers find they have to start spending again," she said.
Russo did offer some caution, outlining the declining capex of the world's carriers (down from $310 billion in 2000 to $205 billion in 2002) and pointing out that the market is likely to shrink further. "But there are signs of stabilization, and Lucent has retrenched, resized and redesigned itself" to be ready for any upturn, she said.
In an effort to win new business while the market continues to shrink, Russo is keen to promote her company as a specialist provider of support services and network software to carriers. "Multivendor systems integration, maintenance, and support services to operators was worth $2.7 billion to Lucent in 2002, but this market is worth about $44 billion in total. I expect services to account for an increasingly large proportion of our revenues in the future. It is an attractive market to target because it is so fragmented; carriers are increasingly keen to outsource in areas they weren't just two years ago; and we have a good story to tell in offering multivendor support."
As coincidence would have it, Lucent today announced that German Wunderkarrier Deutsche Telekom AG (NYSE: DT) is to deploy its Navis iOperations OneVision software. While that may sound like a cure for a lazy left eye, it actually "allows the centralized management of a multivendor optical network," said Russo, thereby cutting costs and the easing the efforts required of carrier network management teams.
She also trumpeted Lucent's heavy involvement in Telekom's new Ethernet-over-SDH service for corporates that was announced here today, so making the German carrier something of a shop window for Lucent's talents in Europe.
Indeed, Lucent listed 12 deals in Europe in total, worth up to $220 million altogether (see Lucent Scores Big in Europe).
While declaring herself unable to comment on Lucent money matters at present because the company is in its quiet period leading up to its next financial statement on April 22, Russo managed a hearty guffaw when asked about industry consolidation and the possibility that Lucent could be acquired by LM Ericsson (Nasdaq: ERICY). "Ha ha ha ha ha ha ha ha!" she bellowed. "There are a lot of rumors about, but I couldn't speculate on Lucent or any other individual companies. What I will say is that a great deal of consolidation has already taken place, as a lot of companies have disappeared or gone into Chapter 11. There has been a huge shakeout."
She also declined to comment specifically on Lucent's relationship with Cisco Systems Inc. (Nasdaq: CSCO) (see Lucent & Cisco: Together at Last), though she confirmed that Lucent would partner "wherever we have a product void. There is value in having selective partnerships if they add value to our customers. It's all about delivering solutions to carriers."
Light Reading's Founding Editor, Peter Heywood, will be hosting two panel discussions at CeBIT: CeBIT Debate: MPLS and QOS on Wednesday, March 12; and CeBIT Debate: ATM Versus Ethernet on Thursday, March 13.
— Ray Le Maistre, European Editor, Unstrung