Lucent seeks buyer for Octel messaging

Benjamin Klayman

CHICAGO: Telecommunications equipment giant Lucent Technologies Inc. is

seeking a buyer for its Octel voice messaging business, sources close to the

situation said on Wednesday.

Lucent officials declined to comment, although executives said in late August

the company would focus on serving large telephone companies in its effort to

return to profits next year. Since its spinoff from AT&T Corp. in 1996,

Lucent has acquired 38 companies, including Octel, which it bought for $1.8

billion in September 1997 in its first major deal.

When it bought Octel, Lucent said it was creating a division with more than

$1 billion in revenues. Since then however, it split the business in two,

spinning off the larger corporate client business into Avaya Inc. last year and

keeping the unit serving the telephone companies.

"It's not a surprise that Lucent would sell this portion of the business

because it was clearly an underperformer," said one analyst, who asked not

to be identified.

Shawn Campbell, an analyst with Northern Trust Corp.'s asset management arm,

estimated the unit's annual revenues at about $225 million and said Lucent would

likely attract bids of at best $250 million. However, he does not see many

buyers in an industry where the Lucent business has been losing market share.

"They're actually losing share to companies like Comverse,"

Campbell said. "Most people are just thinking this business goes away

anyway. I don't know who would really want to buy it, maybe someone who would

want access to some of their customers."

Comverse dominant in sector



The worldwide voice messaging business hit about $4.1 billion last year,
according to Cahners In-Stat Group, a Boston-area market research firm. About $2

billion of that total was accounted for by telephone companies, a segment

dominated by Comverse Technology Inc. of Woodbury, New York, Cahners said.

Avaya officials declined to comment on whether the Basking Ridge, New

Jersey-based firm would have an interest in the Lucent business. Comverse

officials also declined to comment.

Other players in the global voice messaging market include Nortel Networks

Corp. and Cisco Systems Inc. , according to Cahners.

Lucent, based in Murray Hill, New Jersey, has been selling or closing

non-core units ever since it launched its restructuring plan in January. It

recently announced plans to sell its fiber-optic cable unit and two

manufacturing plants, and closed Israel-based optical firm Chromatis Networks,

which it bought for $4.5 billion last year.

Analysts said another prime candidate for sale by Lucent is its Kenan Systems

billing software business, which it bought in March 1999.

"We continue to think Lucent is going to be downsizing the company and

de-emphasizing businesses that either have low market share or are

non-strategic, and this would be a business that would fall into that

category," UBS Warburg analyst Nikos Theodosopoulos said. "I don't

think it's going to be the last thing they sell or shut down."

(C) Reuters Limited 2001.