>It brings us one step closer to bringing LU to its knees. Die LU, DIE!!
NotLongLUNeiderhoffer
well, s.f. notwithstanding, we've got that in common. no position in LU here either.
btw, you're gonna get a mighty big guffaw out of the interview i've posted below -- it's lengthy, but the best part is in the intro (i.e., "note to kobi").
whodafuckwouldvethunkit?
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Lucent Isn't Shopping?
Published by Israel's Business Arena February 28, 1999
Lucent's chief operating officer is adamant that Lucent doesn't have an acquisitions policy, just a business strategy. Tell that to US companies like Octel and Ascend, swallowed whole for billions of dollars. Locally, Lannet changed its name to Lucent Israel for $117 million, WaveAccess cost Lucent a $50 million check, and that's just the appetizer.
By Natasha Dornberg
Ben Verwaayen assured me adamantly that "Lucent doesn't have an acquisitions policy". From the point of view of the executive vice president and chief operating officer, the giant (market cap $140 billion) company only has a business strategy. So don't bother him with phrases like "Lucent's shopping spree", not abroad and certainly not in Israel.
Lucent, traditionally a telephone equipment maker, had been limited by the terms of its split from parent AT&T to cash-only acquisitions, which meant buying up smaller players. Last July, for instance, Lucent bought Octel for $1.8 billion, in order to strengthen voice mail, fax and messaging capabilities. Octel, incidentally, is one of Israeli Comverse's competitors, although not a serious threat to Comverse's titan 40% market share. Just a note to Comverse CEO Kobi Alexander, Verwaayen has never even heard of Comverse, but he did promise to get back to me after I asked him why Lucent wants to be a lightweight competitor in the voice mail market where the heavyweight champ these days has a market cap of $4 billion.
As of last October, the company was free to employ stock swaps, and industry analysts predicted a rapid shift to much more serious plays as Lucent distances itself from its traditional base and moves into a broader-based communications position.
The analysts were right on the mark. Lucent's first major target was networking company Ascend, jockeying for position in converging voice and data networks. Ascend had made a few business gaffes, but had every reason to hope that access to Lucent's massive R&D facilities and its own vision would leapfrog both companies into a leading position in the world of futuristic routers capable of handling any kind of network traffic.
Verwaayen, responsible for Lucent's globalization efforts, certainly remembers that Lucent opened its checkbook here in Israel a few times. In the past year alone, Lucent has taken over Lannet for $117 million and turned it into Lucent Israel. The company also exercised an option to buy-out start-up WaveAccess, (digital wireless short range networks), for $50 million. Lucent invested in 10% of ChipExpress, which developed a time and cost-saving method to manufacture semiconductors, at a company valuation of $100 million.
Lucent's presence here also includes cooperation agreements with ECI Telecom (ECI develops and manufactures a component just for Lucent) and Nice Systems (Lucent distributes Nice products), and, recently, with start-up AudioCodes
"Globes" tried very hard to elicit a glimpse into Lucent's next Levant purchase, but Verwaayen was adamant. "Lucent does not have an acquisition strategy. Lucent has a business strategy."
"Globes": Yes, but putting that business strategy into practice has meant a lot of acquisitions, no small number of which have been right here.
Verwaayen: "You are entirely ignoring Bell Labs. Bell Labs registers three and a half patents a day and develops a huge portion of Lucent's future technologies and products. A company that employs eleven past Nobel prize winners has nothing to be ashamed of in the category of in-house development."
As long as you mention it, rumor has a local branch of Bell Labs opening soon. Very soon.
"Bell Labs was historically very concentrated in the US. Lucent has taken Bell Labs into the world and opened up branches wherever there seemed to be a large pool of the right kind of brain power, like Asia, China, Japan, and Europe, and even the West Coast of the United States, where AT&T hadn't been doing its development.
"I wouldn't rule out the possibility of taking advantage of the reservoir of brains in Israel, but one should always keep in mind that opening up a Bell Labs facility is not something we take lightly. And I'm saying all these slightly contradictory things because I'd like to keep you a little in the dark as to whether we will do it or not."
While you are choosing your steps here, Intel decided to go into communications chips last week, and announced the development will be done here by 100 engineers they plan to hire. Is it getting crowded here?
"I hope not and I don't think so. In leading Lucent's globalization drive, I have seen around the globe that you can identify the new Silicon Valleys on their way up. I think it has to do with great educational systems, eagerness to explore the boundaries of technology and willingness to be entrepreneurial, and regulations that allow people to take advantage of the marketplace.
"I see all three of those elements in place in Israel. I see a pool of entrepreneurial behavior and a government that acknowledges technology is a new engine for economic growth."
Wireless is a very hot field here. Lucent has WaveAccess. Butterfly (wireless networks) was recently bought out by Texas Instruments. Does Lucent plan to make other wireless related acquisitions here?
"Again, we do not have an acquisition policy. We have a business strategy to concentrate on the hottest areas in the communications marketplace.
"Lucent is expanding its business in all the traditional wireless technologies such as GSM and TDMA. We have been very happy with WaveAccess, which has allowed us a more focused view on short-range wireless technology, which is a rapidly expanding market.
"The capacity of wireless expands every 9 months (breadth of band), so time to market is an absolutely essential element of strategy. Companies must be very careful if they choose to develop something themselves in this field.
"Lucent never speculates on future acquisitions but we have acquired twenty or so companies around the world over the past few years and it is very unlikely we will stop here."
Cellular has become an extension of Internet (Motorola-Cisco). Where else do you see it headed?
"If you look to telecom networks in general, wireless will become a way of access much more broadly and not just for voice. This is one of the fastest growing ways of using new applications in the enterprise world.
"I see wireless becoming an easy way to compete with existing suppliers of services. Most importantly, it will acquire the quality of service and reliability that will allow a number of so far hesitant applications to break through. For instance, the local area network is absolutely mission critical for companies and, as we see important security progress, we will see wireless local area networks capable of including employees on the road and abroad, without exposing the enterprise to undue risks.
"Globes" reported a few months ago that Cisco is interested in the acquisition of VocalTec which pioneered IP telephony. Is Lucent there too?
"We have a substantial position in IP telephony. VocalTec is a known player. The first thing that happens if you are even remotely successful in a communications field, is that you get takeover rumors, and I can assure you that when anyone says ‘takeover', Lucent is one of the first names that comes to mind.
"Lucent strongly believes IP telephony has a future, not as the solution but as a solution. We are strongly invested in the IP world and we will continue to watch the arena, including plays by VocalTec, very closely."
What is the ultimate goal of the joint development agreement with voice-over-IP start-up AudioCodes, who are not exactly in your league size-wise?
"The point of cooperation agreements is not to get together the ‘biggies' and the ‘smallies', but should be a win-win situation for both sides, working together to combine technologies and brains.
"In creating such cooperations, we look for elements of combined strengths of various sizes that cover the new situation of the market. In the old days you had either friends or enemies in the market. This is a thing of the past. Now you can compete with someone on the one hand, have a strategic alliance on another hand, have a joint manufacture agreement in another area, and quarrel in court on something else.
"This model is much more business oriented. In short, there is no reason for a company the size of Lucent not to cooperate with a company the size of AudioCodes, where that cooperation can be mutually beneficial."
It looks from here like Lucent and Cisco don't see Israel as a target market, but as a shopping mall for technology. Is this true?
"Absolutely not. If you look to become a true global player, the first thing you have to do is understand the various markets around the world. The Israeli market has traditionally been a very regulated market and we have recently seen substantial change. The new pattern of initiatives here is a whole new market for growth. Lucent has local partners in many aspects of our business and we see many opportunities to expand our presence in the local market in a tactical move forward.
Are you happy with Lannet's integration into Lucent?
Verwaayen: "From my point of view, we are very positive. A few days ago, we launched a Lucent and Lannet product family called Cajun campus. These switching products provide corporate enterprise solutions, and support multimedia environments and both legacy and future technologies.
"This fast new development illustrates how we brought the potential we saw to fruition. Make no mistake however, integration does not mean we absorbed them or that they have ceased to exist as a team or center of excellence. In an acquisition of this nature, we are trying to bring to Lucent the kind of flexibility a company the size of Lannet has."
Where does Lucent plan to go with the new Lucent Israel?
"We're going to grow. That is why we thought it was a great idea to combine forces. You will see in the coming couple of years that Lannet will fit perfectly into Lucent."
I am an Israeli entrepreneur or incubator and I want to sell a great idea to Lucent. What idea should I come selling when I knock on your door?
"First of all, you are more than welcome and I mean that with all possible sincerity. We have an open mind and we are always willing to talk. Specifically, we look for added value that we can bring to market fast. That means not only technology, but also its actual application. We look at the likelihood that others will recognize the value of your idea. In general, we look for entrepreneurs who are more market driven than technology driven.
"We invest approximately $4 billion annually in research and development, and I am pleased to tell you that we don't base a $30 billion company on waiting for just one technology."
You must have a wishlist.
"We most certainly do, but I don't think it's a good idea to publicize one's wishlist. If somebody has something to contribute, we are happy to entertain a discussion, but we won't wait."
globes.co.il |
