Alcatel and 3Com to exit consumer DSL markets
Hi Mike,
I know you try to keep up with the DSL market so here's some news:
totaltele.com
Alcatel sells DSL modems business for $389 million
By Total Telecom staff
07 June 2001
Alcatel said on Thursday it had agreed to sell its DSL modems business to French
consumer electronics firm Thomson Multimedia in an all-stock deal worth 456 million
euros ($389 million).
Thomson Multimedia will acquire the business in exchange for 9.5 million new Thomson
shares. Alcatel said the deal was in line with its strategy to focus on the network
equipment rather than consumer side of DSL. The firm said the DSL modems market would
naturally evolve towards the consumer business model followed by Thomson.
Alcatel's stake in Thomson will rise to 9.6% following the transaction, Reuters, reported, a
3.58% increase on the 6.4% the firm held at the end of March. The transfer of the business
is expected to take place before the end of 2001, the companies said.
Alcatel said the deal did not mean it was pulling out of DSL. The company will continue to
manufacture DSL components, notably DSL multiplexers, where it claims a 52% market
share.
Thomson is the fourth largest consumer electronics company in the world, according to
Reuters and the biggest seller of television sets in the U.S.
The companies' joint statement said the acquisition would give Thomson world
leadership, technological expertise and an established customer base in the high growth
DSL modem sector. Alcatel said it had about 22% of the world market for the products in
2000, selling 1.7 million units, and 28% in the first quarter of 2001.
After its attempt to acquire U.S. rival Lucent failed last week, the French manufacturer said
it would pull out of mobile handsets and divest non-core businesses to focus on
networks, optics and space activities, which it says now account for over 80% of its
telecoms business.
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totaltele.com
Profit warning from 3Com as it bows out of broadband modem
business
By Elizabeth Biddlecombe, Total Telecom
08 June 2001
Santa Clara, California-based 3Com issued a profit warning for fourth quarter results while
announcing that it is pulling out of the cable and digital subscriber line modem business.
In its third consecutive profit warning the company said that revenues for the three
months up to June 1st will be between US$450 to $475 million not between $550 to $600
million as previously announced. Results will be released on June 26th when it is expected
that losses will be reported due to excess inventories and one-time charges related to the
restricting program.
"Business conditions worsened in 3Com's fourth quarter", said Bruce Claflin, chief
executive, in a statement. "However 3Com is taking the steps necessary to achieve future
profitability in this unfavorable climate."
The company will also cease to make high-speed consumer modems in what has become a
trend this week with Alcatel announcing it is also exiting the business. The job cuts this
entails are part of the 3,000 redundancies announced in May and the move is part of a
restructuring plan announced in December 2000. "There is an industry-wide glut of
consumer cable and DSL modems that has driven down prices and margins", read a
statement issued by the company. "3Com is discontinuing its consumer cable and DSL
modem product lines to focus on technologies and markets that can deliver greater
shareholder value."
This moves leaves 3Com with a business targeted at making carrier and enterprise
equipment as well as home networking kit. Business DSL routers and modems for small
businesses and enterprise will continue to be part of the 3Com portfolio. |
