Can Lucent Come Back?

Additionally, the company seems to have stopped looking for a buyer. French telecommunications firm Alcatel was close to a merger with Lucent in May, but the deal failed in a dispute over control of the proposed new company.

"Who's going to buy them?" asks Sagawa, noting it would take a large, diverse company — along the lines of General Electric, say — to both afford Lucent's assets and take advantage of them. Instead, he feels Lucent should concentrate on what is now its core business, selling fixed-line switches and wireless equipment to big phone companies: "Now they just have to execute what they said they were going to do."

And Lucent still has valuable assets like its famous research center, Bell Labs. Chief executive Henry Schacht has promised Lucent will "maintain the core" of Bell Labs in its efforts to carry on as a productive "research and development house."

Bell Labs Timeline

2003: A Telecom Odyssey

The problems Lucent is facing are hardly unique, however. So far, 2001 is shaping up as a year of historically bad magnitude in the industry, and Lucent's layoffs and losses were just part of a week of carnage among telecommunications equipment makers and their employees which may have marked its nadir.

JDS Uniphase, for instance, announced a quarterly loss of $7.9 billion and 7,000 job cuts in addition to 9,000 layoffs made earlier in the year, on top of a $44.8 billion write-off based on the lower value of companies it has acquired — one of the biggest in corporate history. Nortel announced a $19.4 billion quarterly loss on July 19 and Corning Inc. announced a $4.76 billion loss, based on two large write-offs (although it reported increased sales).

"We're in a situation of survival mode," says Sagawa, who says he does not expect an upturn in profits for the big telecom equipment makers until 2003. He adds: "None of them are generating any cash, and they're carrying tremendous debt. You can either generate cash or stop spending."

So for now, the telecom equipment makers are trying to control their burn rates, before they simply burn out and crash.

Page
  • 1
  • |
  • 2
null
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...