Rich McGinn Interview
CNBC - SQUAWK BOX
LUCENT TECHNOLOGIES CHAIRMAN AND CEO RICK MCGINN
MAY 27, 1998
Former power at AT&T can't help but be proud and a little jealous of their offspring Lucent
Technologies. It's the largest manufacturer of telecom equipment in North America. Lucent has
seen its stock jumping 155%, since its public debut two years ago. I thought it was more. Now
the company's wait for a revolutionary breakthrough may have come to an end. Lucent
announced, this morning, it will unveil a portfolio for Internet products for service providers.
The company says its products will change the way data, voice, and video are handled in
public networks. And the market estimated it to grow over 25% a year. Lucent may continue
to be a darling on Wall Street. Shares lost about a point yesterday, closed just shy of their
52-week high, hanging up there at the top of the trading range around 70, this morning. Here
to tell us more is Rick McGinn, he is chairman and CEO of Lucent Technologies. Good morning
Mr. McGinn, good to see you again.
You as well, Mark.
Mark: I have read the press release and it sounds like you have invented the Holy Grail.
That's not our objective. Really what we're doing is trying to serve telephone companies
service providers with the way they're changing their networks as more and more data
applications go across the wide area network, we're giving them what they need to handle not
only traditional voice, but as well, data.
Mark: What does this do that equipment from Cisco doesn't do or ascend I don't mean to single
out Cisco.
I understand. Cisco, as an example, is the leading company in providing enterprises with good
routers delivering good vanilla bits across the network. And really, what we're finding now is
service providers need a way to scale with those large amounts of data going across their
networks and doing it in an efficient fashion. We'd be able to manage those, in a way, that
gives them a chance to make some money as they deliver those bits. And for all of us it's the
math really. All those math courses that we took, the researchers figured out some ways to do
new algorithms and deliver all of that data across those networks, in a very efficient manner,
and in a highly reliable manner. Which gives people what they want. The casual user on the
Internet can have what they need and as well you can deliver quality of service guaranteed
positively will be there kind of service for customers with using this new class of technologies.
Mark: Now, is this... most of these products are usually a combination of hardware and
software? Is that the case here too?
That's correct.
Mark: Okay. Now it's my understanding that with this combination of hardware and software
you can create what amounts to a virtual lease line. You can create different tiers of service
and thus allow different pricing?
Exactly, right down to the individual desktop. So if you have the kind of application that has to
be there in the financial network, financial markets all the time, always on kind of network, you
can guarantee that through that data network. And if you are a casual user that can afford
some bit of interruption or delay you can also get that. The cost and the price will be
correspondingly different.
Mark: We have to break for a commercial and then we'll continue with Richard McGinn who is
chairman and CEO of Lucent Technologies--don't go away!
____________________________________________________________ Mark: We are back,
we're talking with Richard McGinn chairman and CEO of Lucent Technologies, and Vince wanted
to get a question in.
Vince: Rich, it says in the press release that MCI is going to test the new IP technology. Now,
a report in the paper today says that maybe Worldcom and MCI to get their deal are going to
have to sell some Internet divisions. Does it matter to you who owns this? I know they're
customers and you service them but does it really matter where the stuff winds up? Cause
you're going to sell into it anyway?
The networks are exploding all around, in terms of applications, and were having a number of
conversations. MCI is a leader, in terms of Internet transport, they were very anxious to have
a chance to get this technology into their labs, at an early time, that's why we've been
working with them. It doesn't matter to us specifically, as to which service provider uses us
because many will wind up using us. As Mark indicated earlier, we expect about a 25% per year
growth in this category of data networking for service providers to approximately 20 billion
dollars in sales by the year 2001. So an enormous market growing rapidly, in addition to the
optical work and wireless that these carriers are also buying.
Mark: Is this the convergence?
This is the beginning of the convergence. These things don't happen overnight, though they're
much talked about and all the seers have this occurring every single month. What's happening
is there's a revolution for one company is an evolution for another. They're finding ways to
embrace this technology or set of technologies to make their move to accommodate what's
really happening in the real word which is both data and voice are continuing to expand in
terms of their uses out there.
Mark: This was invented in Bell Labs, right?
That's correct.
Mark: I think they've been working on it for, at least a year, which is not a long time they did a
remarkable job, which raises the question, why did you spend all that money buying all those
companies if you did it home-grown?
Because they're different spaces. Really time is essential here. We've been trying to marry up
the good work going on in Bell Labs for the past 12 months, to bring out this new class of
switched IP capability and as well we've already planted our flag, in terms of the ATM world
with our purchase of Yurie and, as well, remote access with Livingston and the connection of
wide area to local area networks were prominent. So, really, we're combining the purchase of
great companies and good management with, as well, what's going on at Bell Labs because we
didn't feel we had cornered the market on intellectual property.
Mark: Richard McGinn chairman and CEO at Lucent Technologies, thanks a lot, good to see you
again.
<<CNBC/Dow Jones Business Video -- 05-27-98>>
[Copyright 1998, MSNBC Business News] |
