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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: epicure who wrote (15092)	3/25/2006 10:55:25 AM
From: Lane3	Respond to of 541791

"Lucent-Alcatel Merger Would Face Scrutiny (Newsbytes Via Thomson Dialog NewsEdge)A merger of Lucent Technologies Inc. and France's Alcatel would likely draw federal scrutiny to see if it threatens national security following the furor over a Dubai-based company's plan to acquire control of six U.S. ports, communications and national security analysts said yesterday. Internet Telephony Conference and Expo But analysts said they saw no obvious reason why a combination of the two telecommunications equipment makers would face major objections from the government on security or antitrust grounds. Murray Hill, N.J.-based Lucent and Paris-based Alcatel said late Thursday that they are "engaged in discussions about a potential merger," but said they could not guarantee they would reach any agreement. A merger would greatly expand Alcatel's business in the United States and allow the two companies to cut costs and better compete with their larger competitors. It is unclear how a merger, if one materializes, would be structured. The two companies said they were discussing "a merger of equals that is intended to be priced at market." Spokespeople for Alcatel and Lucent, which had discussed merging in May 2001, declined comment beyond their statement. If Alcatel, the larger of the two companies, were to buy Lucent, that could trigger a review by the Committee on Foreign Investments in the United States (CFIUS), the interagency group chaired by the Treasury secretary that is charged with investigating such deals to ensure they do not endanger U.S. national security. "I think in this political climate, everything that is coming through CFIUS is gong to get more attention," said Richard A. Falkenrath, a Brookings Institution scholar who served as deputy homeland security adviser and deputy assistant to the president in 2003 and 2004. Congressional concerns this month forced the United Arab Emirates-based maritime company Dubai Ports World to abandon its plan to acquire operations at six U.S. ports, amid heightened worries about protecting vital infrastructure after the Sept. 11, 2001, attacks. But analysts saw few appropriate comparisons in the possible Alcatel-Lucent deal, noting that the French company already does work for the U.S. government and that the sale of telecom equipment is a less sensitive matter than the management of U.S. ports, which have long been seen as vulnerable to attack. "Alcatel is already delivering advanced network solutions to the federal government. Lucent of course has a long history of providing advanced communications services and infrastructure to the federal government," said Mark Bieberich of the Boston-based Yankee Group Research Inc. "Both companies have been properly vetted . . . so I think the risk posed by the merger to the federal government is minimal." AT&T Corp., the former long-distance giant that has now been dismembered, spun off Lucent as a separate company in 1996. Bell Labs, AT&T's legendary research arm, went with Lucent. At its peak, Bell Labs was deeply involved in classified work for the U.S. government. It worked on radar and missile guidance systems, and it designed a secure, scrambled communications system that allowed Franklin Delano Roosevelt and Winston Churchill to talk to each other during World War II, said AT&T's former corporate historian Sheldon Hochheiser. While Lucent still does work for the government, the amount is a far cry from the Cold War, when Hochheiser estimated that as much as a third of Bell Labs' budget was paid for by Washington. In fiscal 2005, Lucent had $104.7 million in federal contracts, with about 65 percent of those coming from the U.S. Army, according to Eagle Eye Publishers Inc., a Fairfax company that tracks federal contracts. Alcatel had $22.4 million in such contracts the same year, with nearly 53 percent for the Army, according to Eagle Eye figures. Today, Alcatel and Lucent are the seventh- and ninth-largest telecom equipment makers, respectively, according to Yankee Group. "In its heyday, this would have been a huge blow to national security and to national pride, but Lucent is a shadow of itself," said University of Colorado law professor Philip J. Weiser. " tmcnet.com