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

To: larry pollock who wrote (3311)	5/22/2001 4:15:06 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 3891

FWIW, I added to my stock position with half a position of 2003 40 calls. I remain confident and trust 'ole Serge whatever he decides to do. Steve

To: larry pollock who wrote (3311)	5/22/2001 4:18:08 PM
From: larry pollock	Read Replies (1) \| Respond to of 3891

Lucent boosts DSL presence with Qwest deal May 22, 2001 03:02 PM ET by Rex Crum RELATED STORIES •Alcatel-Lucent union could benefit both •Lucent mum about possible Flextronics deal •Death, taxes and Lucent • More by Rex Crum -------------------------------------------------------------------------------- Lucent Technologies (LU), beset by more than a year of financial and industry missteps, announced a deal with Qwest Communications International (Q), which shows that despite its problems the company cannot be written off in the networking world. The agreement calls for Lucent to become Qwest's main supplier of DSL equipment and should help Qwest significantly expand its DSL service in 11 western states. For Lucent, the deal marks what company officials say is its largest ever DSL equipment contract, and analysts say it upsets the balance of power in the market for high-speed Internet access technology. "Lucent's basically been edging Cisco (CSCO) out of the number two position for DSL," said Kathie Hackler of Gartner Group Dataquest. "It doesn't portend well for Cisco because Qwest had been a big customer of theirs." Beyond the three-mile mark At the heart of the deal is Lucent's Stinger RT technology platform, which has the ability to extend the reach of DSL technology beyond the typical three-mile limit of a so-called central office -- the facility that houses most DSL equipment. When the Stinger equipment is connected to a central office, it, in effect, transfers the DSL connection technology closer to potential customers. For example, if a central office is 20 miles from a residential area, Lucent's equipment can be connected by optical fiber or other means and set up in the neighborhood needing DSL service. Customers would then have their DSL connections running to what is basically a local box that houses the Stinger technology. "The challenge of DSL has always been to move that technology out of the central office and this [the Stinger] lets a telecom carrier do that," said Mary Ward, a Lucent spokeswoman. For Qwest, extending its DSL offerings is seen as crucial to the company's growth. Qwest already operates its own broadband network in 14 western states, and the company has set a goal having 500,000 DSL subscribers by the end of the year. Qwest officials said the Lucent equipment would add 1.3 million new DSL-capable homes and businesses by the end of 2001 and another 1.2 million in 2002 to its network. Financial terms were not disclosed. "They (Qwest) need this because they have a lot of remote areas that need service," Dataquest's Hackler said. DSL failures The deal comes at a time when the DSL market has experienced several setbacks and shakeups. Several DSL companies have seen their stock prices and revenue plummet as customers have defaulted on payments: NorthPoint Communications recently declared bankruptcy, and on the equipment side, Nortel Networks (NT) just last week announced it would get out of the DSL product business. Hackler adds that the Lucent-Qwest deal could go so far as to make Lucent an even more attractive merger or acquisition target to France's Alcatel (ALA). Rumors began circulating last week that Lucent and Alcatel officials were considering some sort of corporate combination. "That would make a very powerful combination," Hackler said. According to a recent Dataquest study, in the fourth quarter of 2000, Alcatel led the world with a 46 percent stake in sales of the common ADSL equipment to central offices. Lucent came in second with an 11.9 percent share, just edging out Cisco and its 11.5 percent stake. Following the Qwest deal's announcement, Lucent's shares traded down 1.2 percent at $9.78 in late trading. Qwest's stock was down just 0.3 percent at $38.55. Rex Crum is a reporter at Upside.com covering telecom, broadband and wireless. If you would like to submit a letter to the editor regarding this story, email online@upside.com.