Lucent Technologies - Acquisitions And Divestitures Marked 2000

ACQUISITIONS AND DIVESTITURES MARKED (2000)

Lucent continued to pursue acquisitions in 2000 as well as to sell off non-core businesses. It continued to divest its consumer products units, selling its consumer telephone manufacturing business in the United States to Hong Kong-based VTech Holdings for $113 million. Lucent's first major acquisition in 2000 was Ortel Corp. for $2.95 billion. Ortel developed opto-electronic components for cable TV networks and was a market leader for lasers that increased the bandwidth of existing cable networks. The acquisition strengthened Lucent's ability to build high-capacity networks for cable TV operators.

Lucent hoped to strengthen its position in supplying fiber-optic networks with a $4.75 billion acquisition of Chromatis Networks Inc. Chromatis was a two-year-old start-up company that had yet to sell a single product. The company was involved in developing optical networking technology known as DWDM (dense wavelength division multiplexing). The company hoped to link long-haul networks with the so-called "last-mile" of high-speed telecommunications networks. However, the acquisition did not prove fruitful, and Lucent closed down Chromatis Networks in August 2001.

Other significant acquisitions in 2000 included Spring Tide Networks, a vendor of network switches and Internet protocol (IP) products, for $1.3 billion, and Hermann Technology Inc., a supplier of next-generation optical network devices, for $438 million.

Lucent completed the spinoff of its enterprise networks business in 2000. The new company was called Avaya Inc. It began with 34,000 employees in 90 countries and was expected to have revenue of $8 billion annually. Its core business was the manufacture and marketing of traditional telecommunications equipment, which included Lucent's enterprise switching business and call center equipment and software. Lucent remained active in the enterprise market by focusing on corporate demand for hosted Web and e-commerce applications. Its NetworkCare Professional Services division would also continue to provide network planning and integration services.

Although Lucent was the leading vendor of power supplies in the United States and internationally, the company decided to put its power systems business up for sale in 2000. Lucent Power Systems generated revenue of $1 billion in the United States and $1.2 billion internationally. Late in 2000 it was sold to Tyco International Ltd. for $2.5 billion.