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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Skywatcher who wrote (4112)	9/15/1998 1:41:00 PM
From: Jack Kunkle	Read Replies (1) \| Respond to of 21876

Headline: (UPDATE) Latest Talk Has Lucent Eyeing Overseas Firms, Motorola For Takeover NEW YORK -(Dow Jones)- Telecommunications-equipment giant Lucent Technologies Inc., which will be freed Oct. 1 from restrictive accounting rules, is evaluating about a half-dozen potential targets, mainly overseas, according to sources close to the search. Recent media reports say Lucent (LU), the oft-mentioned suitor for networking concern Ascend Communications Inc., recently has held talks with Finnish wireless equipment maker Nokia Oy (NOKA) and France's Alcatel Alsthom (ALA). More intriguingly, sources have mentioned Motorola Inc. (MOT) as a target, saying it would give Lucent entry into the wireless-phone market and add to Lucent's microchip business, especially in the market for so-called digital signal processors, or DSPs, that are used in numerous electronic devices. Other possible targets include L.M. Ericsson Telephone Co. (ERICY) and VocalTec Communications Ltd. (VOCLF). Lucent, which was spun off from AT&T Corp. (T) in 1996, has boosted its arsenal of data-networking products by acquiring small companies. In April, it announced a $1 billion deal to acquire Yurie Systems, a small but fast-growing networking firm. Last year, it acquired Octel Communications Corp., the market leader in voice-mail systems, in a $1.8 billion deal, and announced plans to buy networking firms Prominet Corp. and Livingston Enterprises Inc. in smaller deals. But some observers have speculated that Lucent will seek to make more substantial acquisitions to quickly gain scale in the data-networking sector, particularly because as next month, the company will be able to participate in so-called "pooling of interest" transactions, an accounting method for stock-swap takeovers that entails lower earnings penalties. As a spinoff company, Lucent was barred from doing such transactions for two years. The voice and data-networking industries are rapidly converging as companies race to develop gear that can handle voice, video and data simultaneously. Lucent is broadening its line of data-networking products in order to help telephone companies manage the exploding streams of data, voice and video traffic traversing their networks. Its primary rival, Cisco Systems Inc. (CSCO), is going after those same customers with its own line of routers, switches and other data-networking gear. Interestingly, at a recent industry gathering in California, Cisco's Chief Executive John Chambers predicted the majority of the acquisitions that telecom-equipment makers are making will fail. Chambers said Wall Street assumes the large producers of equipment for today's voice networks, such as Lucent, will acquire companies with data technology and make the acquisitions work. But Chambers, who is obviously biased on the matter, said most of the deals will fail. While Ascend (ASND) has been the long-rumored as Lucent's key target, some experts suggest that whether Ascend wants to sell itself is now a topic of debate, especially in light of its decision last month to acquire network software maker Stratus Computer Inc. (SRA) for $822 million. Another complication, according to Sunday's New York Times, is that Ascend may look to buy Ciena Corp. (CIEN), whose planned merger with rival telecommunications equipment maker Tellabs (TLAB) collapsed Monday after a series of embarrassing setbacks. If that is the case, experts quoted by the Times said Lucent could target Canada's Newbridge Networks Corp. (NN) as a way to expand its networking business on the cheap. Newbridge has been rumored as acquisition bait along Wall Street as observers wondered whether it may be forced to seek a sale if its alliance with Siemens AG falls apart or its German partner buys a competitor such as Ascend. Newbridge has denied the rumors. Copyright c 1998 Dow Jones & Company, Inc. All Rights Reserved.