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kq4ym 4/15/2015 | 6:00:48 PM
Re: Ramifications With French government opposition maybe this one won't fly. I do wonder how much truth is in the statement "... the likelihood of consolidation in the equipment market as competition from China continues to squeeze traditional Western players." If there really is a squeeze one might wonder why French authorities are resistant to large mergers.
Mitch Wagner 4/14/2015 | 5:22:16 PM
French influence The French government can make or break the deal. They love Alcatel-Lucent (and Alcatel before it), as "the champion of the country's telecom sector," according to The New York Times.

But the biggest part of AlcLu's revenue is based on the legacuy Lucent business in Murray Hill, N.J., which contributed almost 44% of 2014 annual revenue of €13.2 billion. Europe was about 22 percent, and Asia just under 20 percent.

Also, for my fellow history buffs:

Alcatel and Lucent were each products of more than a century of industry consolidation. Alcatel's forerunner, Compagnie Générale d'Electricité, was formed in 1898 by a French engineer named Pierre Azaria, evolving over the years into France's largest telecom company. Lucent Technologies, which included the Bell Labs, was created from the breakup in the 1980s of the former telephone monopoly AT&T. It was spun off as a separate company by AT&T in 1996.

And Nokia was founded in 1865 as a wood pulp producer.
gin-drinker 4/14/2015 | 12:48:40 PM
Does anyone think this is a good idea? Other than Nokia or ALU's competition?

 

Scenario 1.  The acquisition takes a long time becuase of government meddling and general complexity, and this causes erosion in customer confidence during a period of uncertainty.  The benficiaries are the competition.

 

Scenario 2.  The acquisition happens, but involves only wireless part of ALU.  This has two consequences.  First, since it was the wireless solution that Alctel used to win the Verizon deal at the start of 2014, does that mean that this decision might be re-evaluated if wireless infrastructure is no longer part of ALU's offering?

Second, the wireless unit is profitable, and makes the remainder of ALU look even worse.  How much liability can ALU dump along with the wireless unit?  It now makes the Timetra group pretty much driving revenue growth for the entire remaining ALU.

Result: the competition benefits from a weakened ALU.

 

Scenario 3.  The acquisition involves the whole of ALU, and executes in reasonable time.  At that point the chaos kicks in - just as we saw when Alcatel bought Lucent, when Ciena bought Nortel, when Marlin bought NSN and Tellabs, and so many other large acquisitions.

Oddly enough, economies of scale never materialize, and company value is quickly eroded.

 

The competition benefit hugely as they pick up customers.  In contrast the new Nokia-Alcatel-Lucent company does not gain any new customers and quickly loses market share.

 

Just my 2 cents.

 

 
Ariella 4/14/2015 | 9:12:12 AM
Re: Ramifications It sounds like the odds are against the merger getting off the ground at all. But onlyh time will tell.
sowen557 4/14/2015 | 7:06:40 AM
Re: Ramifications Two wrongs dont make a right.  These guys are no where in major RFPs in the Mobile Space anymore.
iainmorris 4/14/2015 | 5:18:55 AM
Ramifications This would obviously have major ramifications for partnerships the companies have with other players and potentially relieve some pricing competition in the market -- unlikely to be welcomed by service providers.
[email protected] 4/14/2015 | 5:18:55 AM
Watch out for Ericsson, Huawei The fallout from a combination of Nokia and Alcatel-Lucent is enormous -- the key thing for these two companies now is to move as fast as possible because Ericsson and Huawei are going to swoop on their business in an effort to capitalize on the period of uncertainty.
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