From various wire service reports: "This merger positions Lucent to be a clear leader in
communications networking and will have a significant, positive impact on enhancing
shareholder value," said Rich McGinn, chairman and chief executive officer of Lucent
Technologies.
"Virtually every major service provider worldwide is making decisions on how to engineer and
deploy its new or evolving network for data, voice, fax and video services," McGinn continued.
"On the short list of companies that service providers want to work with, Lucent and Ascend
together will lead the pack. This merger makes our portfolio broader and more powerful, and
gives us the edge as we develop the next generation of networks."
Based in Alameda, Calif., Ascend Communications is a leading provider of wide area network
(WAN) core switching and access data networking equipment for telecommunications carriers,
Internet service providers, corporations and government users worldwide.
"As successful as Ascend is as a stand-alone company, this merger takes us to a higher level,"
said Mory Ejabat, Ascend president and chief executive officer. "Lucent enables us to give
customers a more robust, end-to-end solution, and it complements Ascend's market-leading
technology.
The future of both this industry will not end like a shoot out in a bad western movie. Lucent will
continue to rake in huge revenues from their voice side of the equation. Where they will fight it
out is for the building of tomorrow's computer networks. We can look forward to both
companies to increase their advertising budgets to gain exposure.
The primary focus of many networking firms is the development of the next generation of
computer network technology. Called Gigabit speed, it is the next jump up from the Local Area
Network(LAN) standard speed, 100 BaseT. Lucent recently announced a 40% price decrease in
its flagship products in this arena.
Price competition in this field could lead to a squeeze in profits. Although Cisco has the huge
market share advantage, Lucent can pour money into development from the profitable telephone
business. They can use their larger financial resources to initiate a price war for market share.
As the underdog, Lucent can either compete on product features, price or both. Count on them to
do both.
The end result will probably be Lucent will add to its market share by using its advantages. Both
companies will probably survive and push weaker rivals out of business. Merger mania is
probably just beginning in this field. 3Com Corporation has been placed weaker position. Look
for the smaller companies in this business to sell that line of business or look for merger
opportunities. The future probably provides significant opportunities for the patient in this
business.
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