Word: alcatel
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...they could compete against larger rivals Solectron and Flextronics. SCI, with $9.1 billion in sales last year, mainly assembles PCs and telecom gear, using relatively low-paid labor in countries like Mexico and Malaysia. Sanmina manufactures more complex switches, routers and optical-networking equipment for the likes of Cisco, Alcatel and Motorola, often using skilled labor or factories equipped with robots and lasers. If the merger is approved, as expected, by shareholders and regulators in the U.S. and Europe, the combined company will employ 50,000 workers at 100 plants in 21 countries...
...cost country," partly because social costs - including taxes and other company outlays for the unemployed - are so high. Even though the French government is using its best rhetoric to discourage layoffs - threatening to forbid them in profitable companies, for example - jobs in France are also disappearing. Alcatel, the big French telecom firm, announced that it will close all but 12 of its 120 manufacturing plants worldwide. Food giant Danone said it was laying off 570 people, while Marks & Spencer, the British department store giant, initially announced it would eliminate 1,700 jobs in France as part of a decision...
...highly regarded Bell Laboratories. (Although any deal involving a foreign takeover of that research facility, which does some highly sensitive work for U.S. agencies, will certainly come under close scrutiny by regulators in Washington.) Moreover, Lucent's wireless infrastructure equipment, which is based on a different technology from Alcatel's, could be an important factor in the French company's expansion into Asia...
...course, there's always that catchall explanation of "economies of scale" that gets trotted out whenever a questionable merger is being justified. In the case of Lucent and Alcatel there could, indeed, be enormous potential cost savings on the R&D side, but only if Alcatel does a better job of absorbing its new partner's operations than some of its critics say it has done so far. "We have not seen substantial synergies," says Neil Rikard, research director for networking in the U.K. office of technology consultancy Gartner Group, speaking of Alcatel's handling of its U.S. acquisitions...
...this, of course, rests on the deal actually going through, which looked likely late last week, but still could falter. In fact, the Financial Times reported that Alcatel's move may have put Lucent in play, with such rivals as Ericsson said to be contemplating a run at Lucent's wireless infrastucture business, if not the entire company itself. Stay tuned...