Adieu! Lucent In Merger Talks With Alcatel

Deals

from the how-far-the-mighty-have-fallen dept

If today’s talks of a merger between Lucent and Alcatel prove to be true, it’s the end of the line for one of the biggest busts of the last bubble. Since the collapse, Lucent has been hampered by weak capex spending, too many employees, and legacy pension obligations stemming back to their days as a unit of Ma Bell. Like another bust, Marconi, which got bought out by Ericsson, hooking up with a stronger company is probably the best route. Not only will they be able to reduce headcount significantly, but the recent consolidation in telecom puts pressure on the equipment suppliers. The newly reformed AT&T could have great ability to dictate pricing. The newly formed company will be a sizable strong player, though labor problems could still be an issue. According to one analyst, Lucent’s pension obligations technically make the company bankrupt, while reducing headcount in France (you may have heard) is no easy task. If the merger goes through, the combined company will be worth $30 billion; six years ago today was the market top, then Lucent alone was valued at $400 billion.