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VoIP Systems

AlcaLu's Spare Limb

6:20 AM -- Alcatel-Lucent (NYSE: ALU) has brokered a deal to sell its Genesys CRM and contact center solutions unit for US$1.5 billion in cash, which looks like a pretty good piece of business: Genesys generated revenues of $500 million in 2010, so AlcaLu is getting three times annual sales; and 1,800 staff will transfer to the new Permira -owned business, so that's a fair slice of headcount-related cost that will no longer be on AlcaLu's books. (See AlcaLu to Sell Genesys.)

On the downside, the Genesys business was one of the vendor's highest-margin operations, so once the deal closes (expected late 2011 or early 2012) AlcaLu might see a slight hit on its gross margins.

The big question now, though, is: How will AlcaLu manage the remainder of its Enterprise Division? The vendor had been looking to offload the entire division but only found a buyer for Genesys. That leaves it with a portfolio of VoIP, network management, unified communications, switch and router products for corporate networks that, while generating sales of around €840 million ($1.16 billion) in 2010, it didn't view as strategically sound. (See AlcaLu Explores Options for Enterprise Unit .)

The official line, as laid out in today's press release, is that "retaining [Enterprise] and strengthening it further serves Alcatel-Lucent and our customers best. Our chosen direction is to leverage the natural connections that exist between enterprise and carrier customers, and proactively apply Enterprise's strengths and momentum in unified communications and data networking with them."

The major challenge for AlcaLu's CEO Ben Verwaayen is to motivate the remaining Enterprise division staff, persuade them they're not the company's unwanted children and convince the division's customers that there is real commitment from the board to strengthen the group. That could be a very tough task, especially when rival vendors have made a much stronger commitment to the enterprise sector. (See Huawei Makes Its Enterprise Pitch, Interop Wrap: Huawei's Enterprising Campaign, Huawei's Enterprise Vision Gets Cloudy and Huawei Aims for $100B Annual Revenues.)

— Ray Le Maistre, International Managing Editor, Light Reading

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