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12/29/97 Lucent Could Become A Bigger Spender In Networking Market In 19
NEW YORK -(Dow Jones)- Lucent Technologies Inc., the big telecommunications-equipment maker spun off last year from AT&T Corp., will be freed in late 1998 from a restriction that has prohibited it from making acquisitions using the favorable pooling-of-interests accounting treatment.
That could be significant because the old-line communications equipment companies, like Lucent, Northern Telecom Ltd., Oy Nokia, Siemens AG, Alcatel Alsthom SA, Telefon AB L.M. Ericsson and Philips Electronics NV, have plotted a collision course with networking firms, like Cisco Systems Inc., 3Com Corp. and Bay Networks Inc., Morgan Stanley, Dean Witter, Discover & Co.'s Charles Cory says in the current issue of Barron's. Cory heads Morgan Stanley's high-tech mergers and acquisitions group
"The convergence of data and voice is a freight train," Cory says. "People had better get their brains around that." Aside from Cisco, almost any of the data-networking companies could end up getting swallowed by their deeper-pocketed rivals.
Recent deals indicate telecom-equipment firms are rapidly moving to become bigger players in the networking field. Lucent, recently announced plans to buy networking firms Prominet Corp., in a $200 million deal, and Livingston Enterprises Inc., in a $650 million deal. Earlier this month, Nokia announced plans to acquire Ipsilon Networks Inc., the pioneer of a networking-technology effort called IP switching, for $120 million. Other telecom-equipment and networking firms, including Ericsson, Lucent, Northern Telecom, 3Com, Siemens, Newbridge Networks Corp. and others, have invested in Juniper Networks Inc., a Silicon Valley start-up that has ambitious plans to develop key components for high-speed networking devices in a bid to challenge Cisco.
But at the same time, Cisco is bolstering its lineup of offerings for telecom companies. Last week, Cisco said it agreed to acquire LightSpeed International Inc., a developer of communications software, for about $160 million worth of stock.
Cisco in July agreed to acquire so-called DSL technology that increases the data-carrying capacity of traditional copper telephone wires from Integrated Network Corp. for about $125 million. In June, Cisco agreed to buy Ardent Communications Corp., a firm that specializes in technologies based on the speedy frame relay and ATM formats for integrating the transmission of voice, video and data, in a deal then valued at about $156 million.
Lucent made its first big splash in the networking-equipment business in October, when it agreed to acquire Livingston Enterprises, which provides so-called remote-access products that handle dial-up calls from users to a network. Lucent has said it plans to make data networking one of its "fastest growing segments." Lucent aims to compete with companies such as Cisco by assembling a full suite of products for connecting computers.
Northern Telecom, Lucent's telecom-equipment archrival, has been rumored to be interested in Ascend Communications Inc., a maker of networking gear. Market watchers say telecom carriers need more specialized equipment, including networking technology, more than ever before.
Kent |
