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

To: zbyslaw owczarczyk who wrote (3337)	5/25/2001 2:46:47 AM
From: elmatador	Respond to of 3891

Ericsson would like to get its hands on parts of the Lucent operations, if not the whole company. Read On: Alcatel-Lucent merger talks set rivals scrambling By Richard Waters in New York and Caroline Daniel in London Published: May 24 2001 19:21GMT \| Last Updated: May 24 2001 19:50GMT Merger talks between Alcatel and Lucent Technologies have touched off a scramble among rival telecommunications equipment makers. Faced with a deal that could transform their industry, some are weighing what it would mean for them - and whether there is a way to intrude. "My feeling is that [Lucent] is worth more in pieces" than if it is sold in its entirety, says Torbjrn Nilsson, senior vice president of marketing and strategic business development at Ericsson. Like other big telecoms equipment makers, Ericsson would like to get its hands on parts of the Lucent operations, if not the whole company. "Investment banks are throwing any number of ideas at Lucent, and they are listening hard to creative suggestions," said one New York based analyst. While the core of Lucent's business is shrinking fast - equipment for the circuit-switched networks used in traditional voice networks - other parts, such as wireless infrastructure, are emerging as promising prospects. European vendors, rather than Nortel Networks or US manufacturers, are tipped as the more likely bidders. According to Mr Nilsson at Ericsson, for instance, a merger with the Lucent unit that makes infrastructure for wireless networks would produce a powerful combination. Ericsson could also benefit from Lucent's business that produces transport equipment for metropolitan networks - a business where the Swedish company is weak. Analysts also believe Nokia could be interested in Lucent's wireless infrastructure business. For now, however, Lucent has turned its back on a break-up. Selling operations off separately may look on paper as though it would bring more for shareholders, but it would lead to a crippling tax bill, according to one person close to Lucent. Also, the antitrust issue looms. An Ericsson purchase of Lucent's wireless business would give it 65 per cent of the US infrastructure market, something regulators would not allow, said Mr Nilsson. The tie-up between Lucent and Alcatel has also raised antitrust concerns, but these were played down by Tam Dell'Oro, founder of the Dell'Oro Group, a US-based market research company focused on the networking industry. The firm has analysed overlap between the two businesses. It concluded there would not be significant issues of market dominance in networking equipment. In the area where Alcatel has its strongest market position, DSL, the combined entity would barely have a dominant global position. Alcatel's market share in the first quarter of 2001 was 35 per cent, while Lucent had 16 per cent. However, Ms Dell'Oro said there was strong product overlap. That could make it more likely a rival product would be dumped, thus circumventing competition issues. "When we looked at the first quarter sales for 2001 by product, such as ATM switches and DSL, we found that 75 per cent of Lucent's products overlapped with Alcatel. Alcatel is definitely not going after Lucent for their technology or their products. They want Lucent's US customers and organisational infrastructure." Additional reporting by Scott Morrison