Street Numbed to Lucent Fiber Talk

Is it a case of the company that cried "fiber"?

After more reports that Lucent Technologies Inc. (NYSE: LU) is close to signing a deal to sell its optical fiber division for roughly $2.75 billion, Wall Street seemed unenthusiastic.

In early afternoon, Lucent stock was trading down 0.16 (2.10%) to 7.45.

Last week, Light Reading reported that Lucent was entertaining several deals in the $3 billion range, and that it was expected to close the deal in the coming weeks -- possibly before the company's earnings call tomorrow (see Is Lucifer in Lucent's Debt Details? ). The company is under pressure to sell at least $2 billion in assets in order to meet bank requirements for spinning out shares of Agere Systems (NYSE: AGR).

Lucent officials said work is still being done on potential deals.

"Negotiations with multiple parties for our optical fiber business continue," said a Lucent spokeswoman when reached for comment on Monday afternoon.

Skeptics point to the fact that several months ago the company passed on an offer for division for $5 billion -- and that the price has steadily declined since then.

"The numbers are absurdly low," says one hedge-fund manager who asked not to be named, referring to deals he had heard of in the $2.75 billion range. "This is a company that earlier turned down a deal to sell for $5 billion."

The fund manager said that sources close to Lucent told him that several deals were still in the works, and that management was in the process of picking the best one.

Lucent's optical fiber division has been the object of many suitors' attentions. Light Reading first reported on a potential deal for the optical fiber division last March, when Corning Inc. (NYSE: GLW) was kicking the tires (see Corning and Lucent May Reach Deal). Later, companies such as Alcatel SA (NYSE: ALA; Paris: CGEP:PA), JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU), and Pirelli SpA emerged as potential dealmakers.

Later in the spring, when those companies failed to reach terms with Lucent, hopes shifted to potential dark-horse candidates, such as Japanese giants Furukawa Electric Co. Ltd. or Hitachi Ltd. (NYSE: HIT; Paris: PHA) (see Lucent's $5 Billion Question). At the same time, discussion over the optical fiber division led to general merger talks between Lucent and Alcatel, which were later abandoned (see Alcatel, Lucent Throw in the Towel).

— R. Scott Raynovich, Executive Editor, Light Reading
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johnjohn 12/4/2012 | 8:03:20 PM
re: Street Numbed to Lucent Fiber Talk Shame on LU. They got distracted with the Alcatel merger when they could have sold OFS for $5B. Now they are willing to accept almost half of that just. That is a sign that cash is scarce.
flanker 12/4/2012 | 8:03:18 PM
re: Street Numbed to Lucent Fiber Talk So, all of a sudden your CNN?

Why the heck dont you just repeat the rumor and actually say who is reported to be acquiring them this time, for Pete's sake.

gladysnight 12/4/2012 | 8:03:17 PM
re: Street Numbed to Lucent Fiber Talk
And who gives a rats ass what Wall St "thinks" anyway?

Who can say for sure that Wall St actually does think?

If you followed Wall Sts alleged "thinking" over the last 2 years you'd be zillions in the red.

I recommend thinking for yourself - both to LR and to its readers.
ownstock 12/4/2012 | 8:03:15 PM
re: Street Numbed to Lucent Fiber Talk Unlike the others, Furakawa has the cash to do the deal...having disposed of a lot of their Fitel holdings at or near the peak...

LR it would have been nice to site the WSJ blurb today, then label it as "stuff found near the curb on a NY street", rather than not refer to it at all...but would that be inviting comparisons?


ivehadit 12/4/2012 | 8:03:10 PM
re: Street Numbed to Lucent Fiber Talk scott,
too late with the analysis. the deal was announced, and surprize, wall street was wrong after all. after months of repeating that lucent needs the money to spin off agere, lucent said the money wouldn't help after all.
Scott Raynovich 12/4/2012 | 8:03:06 PM
re: Street Numbed to Lucent Fiber Talk This story was posted yesterday. Of course we will have a new story on this by the end of the day.
rafaelg 12/4/2012 | 8:03:05 PM
re: Street Numbed to Lucent Fiber Talk

Well said. Not that you need MY approval...
But intelligence and "Wall St. Analysts Thinking" is an oxymoron.

Scott Raynovich 12/4/2012 | 8:03:05 PM
re: Street Numbed to Lucent Fiber Talk What Wall St. analysts think probably doesn't matter... what does matter is what collective Wall Street thinks--i.e. creditors, investors, investment banks, e.t.c.

It seems that many people are missing a basic point here: If Lucent doesn't secure new financing or renegotiate its current financing, it will go out of business. Officials openly admitted this today. We detailed this situation in a recent report:

cfaller 12/4/2012 | 8:03:04 PM
re: Street Numbed to Lucent Fiber Talk Scott, based on your earlier report on Lucent's debt, and also on LU's numbers today, it looks like Lucent broke the covenant that covers EBITDA losses.

Unfortunately, I don't have the numbers in front of me, so I can't confirm. Can you clarify whether LU has already missed their EBITDA goal?
Scott Raynovich 12/4/2012 | 8:03:03 PM
re: Street Numbed to Lucent Fiber Talk Glad somebody finally picked up on this!

I wasn't on the conference call (Mary Jander was), but according to her report (up now), management said they must now renegotiate the agreement with the banks as they can't meet the convenants. The story's here:


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