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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: Maple Leaf who wrote (2115)	7/8/2000 1:11:47 PM
From: zbyslaw owczarczyk	Read Replies (1) \| Respond to of 3891

Alcatel Mulls Tracking Stock for Optical-Parts Unit (Update1) By Justin Baer New York, July 7 (Bloomberg) -- Alcatel SA is considering selling shares tied to the performance of its fiber-optic parts unit, a move that would make it the first European company to issue a tracking stock, Executive Vice President Olivier Houssin said. Europe's No. 2 phone-equipment maker said sales in the components unit will be about $400 million this year. The business makes lasers and other parts used in gear that beams information across fiber-optic networks. Demand has soared as phone companies expand networks to handle Internet traffic. Companies issue tracking stocks to free successful businesses to trade separately without giving up ownership. The stock sales are often used to reward employees with options or raise money for acquisitions. By issuing tracking shares for its optical-parts unit, Alcatel can expand the business while showcasing its presence in one of fastest-growing areas of telecommunications. ``Our chief financial officer is working right now on ways to maximize the value of the whole company, and he has been discussing possible tracking stocks in the future,'' Houssin said in an interview. ``Right now, the consideration has been on one specific unit of the optical group,'' the fiber-optic parts business. JDS Uniphase Corp., the No. 1 maker of fiber-optic components, has a market value of about $109 billion. The company in April said it expected sales of about $1.4 billion in the fiscal year that ended June 30. Less Value Alcatel's fiber-optic equipment business competes with many of its component unit customers. By opting for a tracking stock rather than a spinoff, Alcatel's optical parts unit would lack the independence it may need to persuade some rivals to buy more of its products, PaineWebber Inc. analyst William Choi said. That may moderate investors' interest in the new stock, he said. ``You will not get the valuation (from the tracking stock) as you would from an IPO,'' said Choi, who rates Alcatel ``attractive.'' Component sales to other companies is quadrupling, while revenue from Alcatel's in-house equipment business is doubling, he said. There's no timetable for Paris-based Alcatel's decision, a process complicated by its status as the first tracking stock to be evaluated by European regulators, Houssin said. AT&T Corp. in April generated $10.6 billion by issuing tracking shares for its wireless-services unit. AT&T Wireless Group's stock has fallen 14 percent since the offering. Alcatel's American depositary receipts, each representing one ordinary share, climbed 1 1/2 to 70 1/2 in late trading. The stock has more than doubled in the past year.