Word: lucent
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Dates: during 2000-2009
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...would be easy to give up on technology stocks. They're stumbling again, as the likes of Lucent and Nortel pile on bad news. Everyone knows about the glut of cell phones, PCs, chips and fiber-optic line gathering dust. Earnings stink across the board, and stock-market gurus predict we're headed for a demoralizing test of the April lows. In short, gloom is as plentiful as the routers and switches Cisco can't sell. So a lot of investors are hedging their allegiance to technology--and rightfully so. If you want easy odds, take the Lakers to threepeat...
...Given all this, why take on the problem of Lucent - a company that lately has had nothing but commercial, financial and management woes, including the recent high-profile ousting of a chief financial officer who reportedly alienated colleagues by, among other things, bringing her "personal career coach" to a staff meeting...
...merger would create, in terms of total revenues, one of the world's biggest telecommunications equipment makers, not a bad thing for Tchuruk to put on his résumé. For another, despite the pummeling it has take in the stock market, Lucent - which set a record for the biggest ipo in history when it was spun off from AT&T in 1996 - still retains some glossy assets, among them a huge U.S. sales force and customer base and the research capabilities of its highly regarded Bell Laboratories. (Although any deal involving a foreign takeover of that research facility...
...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...