Lucent may sell fiber optics unit as well

Lucent Technologies is reportedly considering the sale of its fiber optics

product business unit in an effort to stem the flow of red ink and reduce a

massive $5.03 billion corporate debt. The Atlanta-based business unit could bag

a price tag of $4 billion to $8 billion.

Alternatively, Lucent said it might also form a joint venture with another

firm for the Optical Fiber Solutions unit. Either the outright sale or a joint

venture would provide Lucent with a cash inflow as well as eliminate a business

unit that is very capital intensive due to intense competition in a field that

operates on leading edge technology.

"Over the next few months we will determine the type of approach that

will provide the most benefits to our customers, share holders and

employees," said Lucent executive vice president (corporate strategy) Bill

O'Shea. Lucent is desperately trying to recover from a steep slide in its

business, best illustrated by its stock price which has plunged from $71 to just

$11 in the past year.

Though no timetable has been set for the fiber-optic cable unit's final

disposition, a spin-off, much like the one planned soon for Lucent's optical

components unit - Agere Systems, could also be one option. But a sale or joint

venture appears to be Lucent’s preferred course of action.

The fiber cable unit posted sales of almost $2 billion and grew 60 per cent

in fiscal 2000, compared with overall market growth of 35 per cent. The unit has

about 6,300 employees and is in the middle of a $1-billion expansion plan.

However, some analysts have cast their apprehensions over the move and stated

that the sale of the fiber optics unit would make very little difference to

Lucent, which has lost more than $1 billion last year.

As part of the restructuring plans, the firm is sacking 10,000 of its employees,

which accounts for 10% of its work force, and is transferring another 6,000

persons to contract manufacturers. However, any turn-around in Lucent’s

fortune in the long-term is not expected unless the company to first overcomes

the fundamental problems that has led to its downslide.

Possible buyers of the fiber cable unit include French telecom equipment

maker Alcatel and Tyco International. Other candidates include fiber-optic

powerhouse JDS Uniphase, Italian cable and tire maker Pirelli and Japan's

Furukawa Electric.