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To: username who wrote (130211)	3/5/2001 7:35:09 AM
From: The Street	Respond to of 769667

March 2, 2001 Lucent's Fiber Unit Draws Strong Interest From Suitors By Nikhil Deogun and Dennis K. Berman Staff Reporters of The Wall Street Journal NEW YORK -- The potential sale of Lucent Technologies Inc.'s optical-fiber business is drawing strong interest from prospective suitors as several companies angle to make bids which could range from $8 billion to $10 billion, according to people familiar with the matter. While the auction process hasn't officially started, Corning Inc., Alcatel SA of France, JDS Uniphase Corp. and Italy's Pirelli SpA, among others, already have informally expressed an interest in the business, these people say. Corning and JDS have gone so far as to make pre-emptive offers to buy the business. Separately, the Securities and Exchange Commission, as part of its enforcement probe related to Lucent's restatement of results for the past fiscal year, has requested two years of audit information from the company's outside accounting firm, PricewaterhouseCoopers LLP, according to people with knowledge of the probe. While the request for multiple years of information from the auditor is typical in SEC accounting investigations, the enforcement division so far has asked the company, customers and at least one former executive for information that covers only the fiscal year ended Sept. 30, 2000, these people say. The investigation is in its early stages, and there have been no allegations of wrongdoing. A Lucent spokeswoman said the company's discussions with the SEC have focused only on fiscal 2000. "The comprehensive review we had done by outside auditors and counsel found no issues related to any prior periods," Kathleen Fitzgerald said. The sale of Lucent's Optical Fiber Solutions unit could be a heated auction, despite the overall slowdown in the telecommunications industry. For now, there is considerable speculation that Corning could pre-empt the auction process with a hefty bid. The reason it may go this route is to gain more leverage. Corning could face significant antitrust concerns in buying the business, because it would control as much as 75% of the fiber market, according to estimates. But people familiar with the matter say the hurdles are surmountable. Should the Corning, N.Y., company go through a formal auction, however, it may have to compete with another bidder with fewer antitrust problems. Corning and Alcatel declined to comment, and Pirelli couldn't be reached. From a financial standpoint, the fiber-unit sale would give Lucent a cash cushion as the telecommunications-equipment sector enters a slowdown. With a cash balance of $3.8 billion, the Murray Hill, N.J., company posted a loss of $1.02 billion for the quarter ended Dec. 31 and already is expecting to take a restructuring charge of as much as $1.6 billion during the current quarter to absorb 10,000 layoffs. Of course, with the industry continuing to slow down, the bidders may not be willing to pay as much now as they were a few weeks ago. Indeed, an executive close to one potential bidder said the business wasn't worth more than $5 billion to $6 billion, given the current market, and that projections of $8 billion to $10 billion were "very rosy." What makes Lucent's operation attractive to buyers is its capacity for making so-called premium fiber, which is optimized for specific purposes, such as long-haul telecommunications lines or metropolitan-area links. Analysts say a sale might be viewed as an unfortunate consequence of the company's financial situation. "It might not be the type of business that meets Lucent's desired profile; nonetheless, it's a very good business," ING Barings analyst Tom Lauria said. -- Michael Schroeder contributed to this article.