re: Alcatel, Lucent Seal DealComrades, The success criteria for this merger seem to be extremely modest. In the first year there'll be about $1.7B in merger costs, balanced by an overall goal of $1.7B savings in job cuts. In my experience, the forcast for merger costs is probably an under-estimate, while the forecast for cost saving is probably an over-estimate.
Considering the enormous effort a merger like this will involve, shouldn't Russo/Tchuruk be talking up the opportunities for incremental revenue?
For example, the combined revenues of LUALA are supposed to be $25B. But what is their forecast for the incremental revenue gain post-merger?
At what point are we allowed to look at the numbers and declare this whole thing to be a success or a failure? I guess by then Serge is sitting on a beach in Mauritius and Patty's running for governer of somewhere or other.
I'm reminded of the 1992 "merger of equals" when Wellfleet (#2 router company at the time behind Cisco) bought Synoptics (#1 hub company at the time, ahead of Cabletron). The day the merger executed the combined company was bigger than Cisco.
But within a year, Bay was struggling. Two more years saw the company sold off to Nortel for scrap value.
Just curious, but does anyone actually have an example of these mega-mergers that's actually worked? By this I mean where the combined company actually became worth more than the sum of its parts?
re: Alcatel, Lucent Seal DealI think there was somthing like a $7Million bail out clause in that contract, so if Lucent/Alcatel take that option they may either doom Riverstone, or let it go to Ericsson for a Bargin.
I agree that Riverstone would be a stupid product for Alcatel to push when they can provide the 7750/7450 which are far superior products.
I guess they can deep 6 Riverstone and provide the customers that use them with the Alcatel IP/Eth platforms.
re: Alcatel, Lucent Seal DealWell I'd guess that their 1st order of business will be to shit can the $207M purchase of RSTN.PK junk that LU just bought, given Alcatel has a much superior platform already in large scale deployments (i.e. Timetra boxes). Maybe they'll take a few crumbs from Ericsson now just to save their asses? Talk about not coordinating acquisition startegies....duh!
re: Alcatel, Lucent Seal DealA very likely merger will be the combined ALA+LU buying Juniper. Its a perfect fit product-wise and the soon to be LU+ALA combo is the first telecom company big enough to swallow Juniper's market cap.
I also think Ericcson or Nokia might still make a play for Lucent. It's mot very likely with the 500 million dollar breakup fee in the ALA+LU deal, but it isn't out of the question.
re: Alcatel, Lucent Seal DealWhat about Nokia doing something? Nokia is #2 in wireless behind Ericsson but doesn't really have ANY respect in IMS yet (from what I can tell) and doesn't seem to have done anything to get into the whole wireline/wireless convergence theme.
Do they get out of infrastructure and just focus on handsets, or do they make a move to follow in the steps of Ericsson? Is Nortel a good fit for Nokia?
The success criteria for this merger seem to be extremely modest. In the first year there'll be about $1.7B in merger costs, balanced by an overall goal of $1.7B savings in job cuts. In my experience, the forcast for merger costs is probably an under-estimate, while the forecast for cost saving is probably an over-estimate.
Considering the enormous effort a merger like this will involve, shouldn't Russo/Tchuruk be talking up the opportunities for incremental revenue?
For example, the combined revenues of LUALA are supposed to be $25B. But what is their forecast for the incremental revenue gain post-merger?
At what point are we allowed to look at the numbers and declare this whole thing to be a success or a failure? I guess by then Serge is sitting on a beach in Mauritius and Patty's running for governer of somewhere or other.
I'm reminded of the 1992 "merger of equals" when Wellfleet (#2 router company at the time behind Cisco) bought Synoptics (#1 hub company at the time, ahead of Cabletron). The day the merger executed the combined company was bigger than Cisco.
But within a year, Bay was struggling. Two more years saw the company sold off to Nortel for scrap value.
Just curious, but does anyone actually have an example of these mega-mergers that's actually worked? By this I mean where the combined company actually became worth more than the sum of its parts?
Cheers,
Geoff
I agree that Riverstone would be a stupid product for Alcatel to push when they can provide the 7750/7450 which are far superior products.
I guess they can deep 6 Riverstone and provide the customers that use them with the Alcatel IP/Eth platforms.
farsonic
I also think Ericcson or Nokia might still make a play for Lucent. It's mot very likely with the 500 million dollar breakup fee in the ALA+LU deal, but it isn't out of the question.
Do they get out of infrastructure and just focus on handsets, or do they make a move to follow in the steps of Ericsson? Is Nortel a good fit for Nokia?
Just some thoughts.