News of the proposed $13.4 billion merger with Alcatel sent some at
the U.S.-based Lucent Technologies polishing up their French while
others updated resumes.
The new joint company worth $25 billion plans a
European headquarters and an 8,000-person job cut.
While CEOs of the two companies focused
on the synergistic benefits of a “merger of equals” between wire-line
Alcatel and wireless Lucent, analysts and others point out this new
marriage could have a rocky start.
Although the agreement could spur competitors Nortel or Ericsson to
merge or force networking giant Cisco to seek out smaller
vendors to plug any gaps, challenges remain, according to Brian Partridge, a Yankee Group senior analyst.
Whereas Jeff Heynen, an analyst with Infonetics said this is a match made in heaven due to Alcatel’s market-leading wireline broadband access deployment and Lucent’s CDMA strength.
However, “if Alcatel thinks they will change the leadership of the
next-gen voice landscape by merging with Lucent, they are misguided,”
said Stéphane Téral, another Infonetics analyst. The combined
Alcatel-Lucent company will be in sixth place behind market leader
Nortel and Siemens.
Partridge sees Nortel as likely the next merger. Nortel faces the
same challenges as Lucent.
“As observers, it would be foolish not to see challenges,” Partridge
told internetnews.com. Among the potential stumbling blocks: the
Franco-American culture shock, job cuts and a climate against foreign
investment in the U.S.
Partridge said Lucent enhanced its attractiveness as a merger
candidate by bringing in new management and investing in VoIP, 3G and
broadband. “They got their business in order and made some good bets in
technologies,” said Partridge.
The merger would make the new company the “dominant wireline
equipment supplier in both North America and Europe,” according to
Partridge. Still, the union would produce only a medium-sized telecom
player above Ericsson but below Cisco.