Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Alcatel-Lucent enterprise on the block again?

Jim Duffy | Nov. 11, 2013
Reports that IP telephony/Ethernet gear unit is being shopped around for second time in three years

Alcatel-Lucent is reportedly looking again to sell its enterprise business as it attempt to cut expenses through an asset sale.

Citing unnamed sources, Reuters is reporting that Alcatel-Lucent has enlisted Lazard, Ltd. to help it find a buyer for its enterprise business, which makes IP telephony and Ethernet switching equipment. It would be the second time in three years that the French company attempted to unload the unit.

Two years ago, Alcatel-Lucent confirmed that it was considering "strategic options" for its enterprise assets, which at that time also included its Genesys contact center business. Genesys was sold for $1.5 billion in early 2012.

A spokesperson at Alcatel-Lucent's enterprise business said the company doesn't comment on "speculation and rumors" when asked to respond to this week's Reuters report.

Alcatel-Lucent is looking to divest 1 billion euros $1.34 billion US dollars worth of assets by 2015, Reuters states. The company plans to shed 15,000 positions by that time as it attempts to regain profitability.

In June, the company announced a fresh strategic plan under new CEO Michel Combes called "The Shift Plan." It is intended to transform Alcatel-Lucent into an IP networking and ultra-broadband specialist, with a growing and cash generative business and a sound balance sheet by the end of 2015.

The Shift Plan also calls for selling off 1 billion euros worth of assets and cutting annual operating costs by the same amount.

The enterprise unit may have to be split to be sold. Reuters reports that shoppers two years ago found the telephony business unappealing due to high costs associated with a unionized European workforce and a legacy product line being impacted by cloud-based telephony providers.

In Ethernet switching, Alcatel-Lucent's share of the $20 billion worldwide market has averaged 1.2% annually since 2010, according to Dell'Oro Group. It's had some high-profile wins with California State University and Advocate Health Care but equipment was discounted by as much as 74%.

In 2012, Alcatel-Lucent's Ethernet switching revenue was $238.1 million and its enterprise telephony revenue was $928.6 million, according to Dell'Oro.


Sign up for CIO Asia eNewsletters.