Lucent considers tracking stock for optical unit
By Reuters
Special to CNET News.com
January 24, 2000, 12:30 p.m. PT
URL: news.cnet.com
NEW YORK--Telecommunications equipment maker Lucent Technologies may create tracking stocks for its optical networking or microelectronics units and sell some slow-growing operations, sources familiar with the situation said.
A tracking stock would let Lucent highlight the strength of its fast-growing businesses, particularly capitalizing on the recent fervor for optical networking stocks.
No decision has been made on the creation of one or more tracking stocks. An announcement could be made this quarter, sources said.
"It's fair to say that they are thinking about it," said one source, who declined to be identified by name.
A Lucent spokeswoman said the company does not comment on rumor or speculation.
Tracking stocks have become a popular way for companies to highlight a fast-growing unit and increase shareholder value. Lucent's former parent, AT&T, is launching a tracking stock for its booming wireless telephone unit.
Lucent, which last week said first quarter profits fell 23 percent as revenue remained flat, is under pressure to regain investor confidence and restore growth, analysts said.
Lucent has been pitted against chief rivals Cisco Systems and Nortel Networks in a fierce battle to supply telephone companies, Internet service providers (ISPs) and large corporations with sophisticated equipment that can transmit increasingly large volumes of data and voice traffic.
An optical tracking stock may be well-received by the stock market and the unit could be valued as high as $70 billion, analysts said.
Last fall, Lucent reorganized into four core units to better focus on the fastest-growing industry segments, such as semiconductors, wireless, optical and data networking, and professional services.
Lucent recently has moved to expand its microelectronics unit, which makes sophisticated semiconductors for communications networks and products. The company recently agreed to acquire privately held Agere for about $415 million in stock to move into the market for programmable semiconductors for data networks.
In addition to mulling tracking stocks, Murray Hill, N.J.-based Lucent is also looking to exit certain slow-growing businesses, sources said.
The company recently shed its consumer telephone manufacturing assets to VTech Holdings, and the divestiture of other non-core businesses will likely follow, sources said.
Divesting Systimax, which makes cabling systems for corporate campuses, would be an obvious move, analysts said. Systimax's declining sales has dampened Lucent's results for months and weighed on the performance of its so-called enterprise unit, which sells equipment to large businesses and government agencies. |
