Lucent Technologies to Sell U.S. Sales Group That Serves Small and Mid-Sized Businesses
...this looks like a great way to preserve margins on lower end products...make the products. make the margins, end of story. No sales infrastructure..
Move Will Create the Largest Integrated Solutions Provider For Small and Mid-Sized Businesses in the United States
April 22, 1999 06:46 AM
MURRAY HILL, N.J., April 22 /PRNewswire/ -- Lucent Technologies LU , the U.S. market leader for communications systems for both small and large businesses, said today it will sell its U.S. sales group that serves small and mid-sized businesses to a newly formed company dedicated to serving the full range of communications needs for this market. Terms of the agreement, which were negotiated as part of a competitive bidding process, were not disclosed. The company's name will be unveiled when the sale is closed in early June.
The company will be led by Susan Loughridge Mandl, who brings 18 years of experience in both sales and finance in the telecommunications industry to the company. Mandl, Bessemer Holdings, L.P. and a small group of investors will own the company. Mandl, currently president and CEO of Newcourt Communications Finance, will be chairman and CEO.
The company will be the largest integrated solutions provider in the United States with a 1998 revenue base of $850 million. It will be the largest indirect sales channel for Lucent, and will focus solely on small and mid-sized businesses -- typically those with fewer than 250 employees.
Following the sale, about 2,000 Lucent associates providing sales and sales support services to small and mid-sized businesses are expected to become employees of the company, which will provide compensation and benefits similar to Lucent's. They will form the foundation for the start-up, which will provide Lucent systems, as well as data equipment and communications services, including local, long-distance and Internet services.
"More than 75 percent of small and mid-sized businesses in the United States prefer to buy their communications systems through local firms that are a one-stop shop for a wide range of products and services," said Bill O'Shea, group president of Lucent's Business Communications Systems unit. "This move increases our ability to reach small and mid-sized businesses more efficiently and effectively. It aligns our sales strategy with the way these businesses want to buy, and lets both Lucent and this new company specialize in what each does best for those customers."
"Today's announcement is great news for customers," said Mandl. "Our new organization can move forward to offer small and mid-sized customers throughout the country the latest in innovative communications products and services to help them succeed in this challenging new world. The company has assembled a strong and diverse management team, with extensive background in data, telecommunications and distribution. With this highly trained sales and support organization, we are positioned to make the most of tremendous opportunities in the communications marketplace."
Mandl's company will be headquartered in the high-tech Dulles corridor of Virginia, with regional offices nationwide.
"This step also opens up exciting, new opportunities for our employees," O'Shea said. "They'll be coming in on the ground floor of an organization focused exclusively on small and mid-sized businesses. With their vast market experience and the new company's vision and resources, they will be able to tap into the growing demand for integrated voice and data network solutions."
Lucent estimates that the U.S. market for small and mid-sized business systems and services is growing at 12 percent annually and is expected to reach $21 billion by 2002.
Under the agreement, Lucent's 700,000 U.S. small and mid-sized business customers will become the new company's customers. Lucent will continue to provide maintenance services to small and mid-sized businesses, and the company will promote and sell Lucent's maintenance services. Lucent also will provide interim installation and order management for the company.
Lucent said it will continue to invest in research and development, manufacturing, and developing systems and applications for both small and large business customers, including products that converge voice and data. Industry analysts say that the market for converged voice and data systems for small and mid-sized businesses alone is expected to grow 140 percent to $4 billion by 2002.
In addition, Lucent will continue to have the largest direct sales force in the industry for large and multinational business customers, generally those with more than 250 employees.
Mandl also named Lewis Hay III as president of the company. Hay was most recently executive vice president and chief financial officer of U.S. Food Service, the nation's largest broad foodline distributor.
Throughout her career, first with AT&T then with Lucent, Mandl has held a number of positions that have given her first-hand experience with the needs of small and mid-sized businesses. She also held a number of executive positions, including Sales and Services Division vice president of Lucent's Business Communications Systems group, as well as vice president of the group's International division. As president and CEO of Newcourt Communications Finance, Mandl was responsible for managing and expanding the global financing program serving Lucent's Business Communications Systems customers.
Once the sale is complete, Lucent will have the most extensive distribution network serving small and mid-sized businesses in the United States. The move also mirrors the way Lucent now serves small and mid-sized businesses in the rest of the world.
The new company will sell Lucent's wide range of award-winning products and software for small and mid-sized businesses, including the PARTNER(R) Advanced Communications System, the Merlin Legend(R), GuestWorks(R) systems, DEFINITY(R) ProLogix(TM) Solutions, and IP Exchange Systems. IP Exchange Systems, introduced last year, let businesses converge their voice and data communications on a single IP network. The company also will sell future Lucent products developed and manufactured for small and mid-sized businesses. Both Lucent and the new company will rely on Lucent Technologies Product Finance for customer financing.
Lucent Technologies, headquartered in Murray Hill, N.J., designs, builds and delivers a wide range of public and private networks, communications systems and software, data networking systems, business telephone systems and microelectronics components. Bell Labs is the research and development arm for the company. For more information about Lucent, visit our web site at www.lucent.com.
SOURCE Lucent Technologies
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