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Strategies & Market Trends : Drillbits & Bottlerockets -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (4073)	2/21/2001 6:42:05 PM
From: Peach	Read Replies (1) \| Respond to of 15481

I repent and capitulate (again) all at the same time, CEO Jorj. Norma

To: Jorj X Mckie who wrote (4073)	2/21/2001 6:47:41 PM
From: Original Mad Dog	Read Replies (1) \| Respond to of 15481

Fire sale, anyone? dailynews.yahoo.com Wednesday February 21 4:51 PM ET Lucent's Fiber Optic Unit May Fetch Billions By Ben Klayman CHICAGO (Reuters) - Telecommunications equipment giant Lucent Technologies Inc. (NYSE:LU - news) could sell its fiber-optic cable unit for $4 billion to $6 billion, analysts and portfolio managers said on Wednesday. Lucent, struggling with losses and a heavy debt burden, could use the sale of its Norcross, Ga.-based unit to ease its financial crunch, analysts said. Optical Fiber Solutions had almost $2 billion in sales and a heady 60-percent growth rate in fiscal 2000. ``It makes sense. To be sure, the ability to bundle the optical cable with the sale of systems is nice, but one of the considerations Lucent is facing is its financial structure,'' Josephthal & Co. analyst Lawrence Harris said. ``If the company can reduce its debt, that's positive.'' Lucent could sell its fiber cable unit, which employs more than 6,000 people, in as little as two weeks, the Wall Street Journal said, citing people familiar with the matter. Lucent spokeswoman Michelle Davidson declined to comment. The company's stock closed down 74 cents, or 6 percent, to $11.60, off its 52-week high of $75.25. Over the past year, Lucent has underperformed the Standard & Poor's 500 Index by about 75 percent. In the same period, glass and fiber optics maker Corning Inc. (NYSE:GLW - news) has underperformed the index by about 48 percent. ING Barings analyst Tom Lauria said the possible sale would free Lucent from capital-intensive business, a welcome move at a time when the company is struggling to cut debt. The move would follow Lucent's expected spinoff of its Agere Systems Inc. optoelectronic components unit, which could raise as much as $7 billion. The Agere spinoff is expected by the end of March. Most analysts believe $4 billion would be the likely selling price for Lucent's cable unit as the U.S. economy has slowed and the telecom equipment sector has suffered. ``I would suspect that while the unit is profitable, it may not generate the same level of margins as Corning and the valuations (in the fiber-optic cable sector) have come down,'' Josephthal & Co. analyst Lawrence Harris said. Whatever Lucent raised in such a deal would be welcome as it scrambles to arrange new financing and cut its debt load. As of Dec. 31, Lucent had $5.03 billion of debt maturing in one year, up from $3.48 billion at the end of September, the company said in a January filing with the Securities and Exchange Commission (news - web sites). The company also reported a $1 billion first-quarter operating loss last month. To give it more flexibility, Lucent also is trying to arrange $6.5 billion in financing by Thursday, when a $2 billion line of credit expires. Possible candidates to buy Lucent's fiber cable unit include French telecom equipment maker Alcatel (CGEP.PA) and diversified manufacturing and service company Tyco International Ltd. (NYSE:TYC - news), analysts and portfolio managers said. Both companies declined to comment. Analysts said Alcatel looks for bargain acquisitions and buying Lucent's cable business would make it a strong No. 2 to Corning in the fiber cable sector with 30 percent to 40 percent of the market. Tyco bought Lucent's power systems unit for $2.5 billion at the end of last year. Analysts dismissed Corning as a possible candidate because the combined company would raise antitrust concerns with 60 percent to 75 percent of the market, compared to Alcatel's 10 percent to 15 percent. Corning declined to comment. Michael Cohen, co-manager of the Alpha Analytics Digital Future Fund, said another possibility to a sale could be a spinoff, much like Agere. He said while fiber-optic cable sales remain strong for now, the move could pay off long term. ``For shareholders in the short term and largely because of Lucent's predicament, I think autonomy of the faster growing parts of its business will yield a total value for shareholders that's higher than the current share price,'' he said. Dresdner Kleinwort Wasserstein analyst Ariane Mahler said Lucent is in no hurry to sell the cable unit. ``When you have fiber plus systems as a bundle, you can offer a lot of savings to your carrier customers,'' she said. ''Strategically, it makes sense to keep it, but they could unlock a lot of value if they (sold) it.'' Larry Seibert, portfolio manager with New York money manager Barrett Associates, said he doesn't want Lucent to sell the cable unit, but realizes the company's financial position may dictate such a move. ``They have to be careful that they don't strip away all that's valuable there and spin it out into a bunch of little companies,'' he said. Other possible suitors could include such electronics parts makers as Celestica Inc. (NYSE:CLS - news), Jabil Circuit Inc. (NYSE:JBL - news) and Sanmina Corp. (NasdaqNM:SANM - news), he said.