Gorging in monopoly profits doing unrelated research to fulfill engineers egos for prestige and to earn Nobel Prizes. Enter Globalization. Out goes Bell Labs.
Elmat won't miss CCITT, ITU or Bell Labs!! Those artifacts of the old era, were responsible for half of the world's population never hearing a dial tone. Bury all of them!
Amid Qualms about Bell Labs' Future, Lawyer Seeks to Halt Lucent Takeover
BY KEVIN COUGHLIN
c.2006 Newhouse News Service
Mention Bell Labs to Kenneth Vianale, and he recalls a star.
"They put one of the first communications satellites into orbit -- Telstar. I still remember that as a kid," Vianale said.
On Wednesday, the Florida lawyer will ask a judge in Union County, N.J., to block shareholders of Lucent Technologies, the parent of Bell Labs, from voting Thursday to accept a takeover bid by rival Alcatel of France.
Vianale represents a group of Lucent shareholders demanding more details from the Murray Hill, N.J., telecom-equipment company -- including details about the fate of Bell Labs, America's most famous industrial research lab, birthplace of transistors, solar cells and Telstar. About the size of a disco ball, Telstar inspired hit songs and Cold War pride.
Most Wall Street analysts who follow the companies said the planned stock swap, while not the "merger of equals" announced April 2, still makes sense for struggling Lucent and Alcatel, and is expected to win approval Thursday from shareholders.
The two companies boast complementary products and markets, they said. And the companies' share prices finished last week still in line with the swap ratio contained in the acquisition agreement, indicating investor expectations for shareholder approval of the deal.
The company, to be named Alcatel Lucent, would hope to extend its global reach and compete more efficiently in fast-growing China against rivals who also are consolidating. While headquarters would be in Paris, North American operations would be based in New Jersey, also still home to Bell Labs.
"We can do things together that we cannot do on our own," said Lucent Chief Operating Officer Frank D'Amelio, whose duties at the combined company would include laying off about 9,000 people as part of $1.7 billion in "synergies" during three years.
But critics of the deal have grown louder lately.
Alcatel has been forced to fend off charges that it is paying too much by offering one share of its stock for every five shares of Lucent's, essentially a $13.5 billion purchase.
From Europe have come questions about Lucent's shaky performance -- Lucent stock is down about 24 percent since merger plans were unveiled -- and about the company's pension and retiree health care obligations. And Lucent unions and retirees have voiced fears about their future, despite reassurances from the company.
Shareholders, whose nest eggs shattered as Lucent's once-golden stock plunged from an adjusted high of $84 in the go-go '90s to less than $3 today, grumble that Alcatel is paying no premium and maybe Lucent should court other buyers. And the combined board would tilt toward French-based Alcatel.
Looming in the background, there is Bell Labs.
Both companies have said research will figure prominently at Alcatel Lucent, and D'Amelio foresees few job cuts at Bell Labs. Jeong Kim will remain as president and has said he expects long-term, fundamental research to continue in areas as diverse as nanotechnology, the nature of spider webs and quantum computing.
But Kim would report to Alcatel's Mike Quigley. While Quigley has degrees in physics, math and engineering, his company's research focus has been much narrower than that of Bell Labs.
"They don't have that religion at other companies," said Art Ramirez, a Bell Labs materials scientist. Ramirez said his daughter found Bell Labs cited in Guinness World Records for the most Nobel Prizes. "That's what's at stake, in some sense," he said.
Concerns about the French flag flying over laboratories in Murray Hill and Whippany, N.J., are more than symbolic.
Bell Labs has sensitive U.S. government contracts, a legacy dating to secure phones used by FDR and antiballistic missile projects during the Cold War.
Anticipating Washington's concerns about the merger, Lucent swiftly announced plans to isolate sensitive work within an American subsidiary. The unit would be overseen by former heads of the U.S. Defense Department, CIA and National Security Agency.
The plan is under review by a multi-agency federal panel, the Committee on Foreign Investment in the United States. Although this panel hardly ever opposes a merger, it could order the sale of Bell Labs -- which probably would force another round of shareholder voting, analyst Per Lindberg of Dresdner Kleinwort warned Alcatel investors last month.
Alcatel already decided to divest its own defense holdings in France, Lindberg said.
"Any friend of order and fan of mutual reciprocity must ask himself why Alcatel would want to purchase a U.S. defense arm without any representation on the board and decision-making powers," Lindberg wrote in a series of reports critical of the merger.
Proxinvest, another firm that advises French investors, also is skeptical.
"We are advising our clients to reject the whole deal," Proxinvest President Pierre-Henri Leroy told Reuters last week.
Established in 1925 in New York as the Bell Telephone Laboratories, Bell Labs moved to New Jersey before World War II and began churning out inventions that laid the groundwork for today's digital era.
Light emitting diodes, the Unix computer language, cell phone technologies and the charge-coupled-device -- a key component of digital cameras -- all have Bell Labs pedigrees. Information theory -- vital for modern networks -- was born there. Bell Labs physicists discovered evidence to support the Big Bang theory of the universe, earning one of the institution's six Nobel Prizes.
Bell Labs' open-ended research was subsidized by the AT&T telephone monopoly. A fraction of every phone bill paid for dazzling discoveries and inventions.
That formula was doomed by the breakup of AT&T in the early 1980s. In 1996, most of Bell Labs was ceded to spinoff Lucent, a manufacturer of telecom gear in a brutally competitive industry.
Lucent supported basic research even as its fortunes sagged. But the size and scope of Bell Labs shrunk dramatically, as did research at most other industrial labs.
"The old Bell Labs, where you had unfettered research, is gone," said Narain Gehani, dean of computer science at the New Jersey Institute of Technology and author of "Bell Labs: Life in the Crown Jewel."
Lucent is selling its vast Bell Labs campus in Holmdel, N.J. And Kim, a rich entrepreneur lured back to Lucent last year, keeps pushing Bell Labs to contribute more to the bottom line.
"The critical challenge always is to harness a strong research capability with a vision of the future, while addressing customers' needs today and tomorrow," Kim, a former U.S. nuclear submariner, said in a prepared statement.
Even with the merger uncertainties, Bell Labs managed to host a July conference on quantum computing -- another esoteric but potentially revolutionary field with strong roots in Murray Hill.
If Alcatel brings fiscal stability, it could bode well for Bell Labs, said Peter Shor, a quantum computing pioneer at the Labs prior to joining the Massachusetts Institute of Technology.
"It depends how they do the merger," Shor said.
Sept. 5, 2006
(Kevin Coughlin covers technology for The Star-Ledger of Newark, N.J. He can be contacted at kcoughlin@starledger.com.)
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