The US company, Lucent Technologies Inc., plans to put its Optical Fiber Solutions unit up for sale.
The unit – the second-largest producer of fiber-optic cable behind Corning Inc., with fiscal 2000 …
The US company, Lucent Technologies Inc., plans to put its Optical Fiber Solutions unit up for sale. The unit – the second-largest producer of fiber-optic cable behind Corning Inc., with fiscal 2000 revenue of about US$ 2 billion – is one of Lucent“s bright spots. Optical Fiber Solutions reported sales growth of 60% in fiscal 2000 and was the only unit in Lucent“s core service-provider business to report sales growth during Lucent“s fiscal first quarter that ended 31Decembre. A Lucent spokeswoman declined to comment on a possible sale. It is unclear what the 6,000-person operation, based in Norcross, Ga., would fetch on the open market. There are estimates the unit could fetch two to four times annual sales, meaning a potential sales price of as much as US$ 8 billion. Other estimates are more conservative. With the telecommunications industry in the throes of a painful slowdown, some analysts say the final price could wind up being much closer to $4 billion. The pending sale comes on the heels of what has been a tumultuous period for Lucent. The loss-plagued telecom equipment giant is in the midst of a financial and strategic restructuring, and selling the optical unit would seem to be one way for the company to strengthen its deteriorating balance sheet. A sale is also consistent with the theme sounded by Henry Schacht, Lucent“s chief executive officer, in January. At that time, Schacht said he planned to drive the company from being a highly diverse concern to one focusing on next-generation wireless systems and on the switching and routing segments of the telecommunications industry. Last quarter, Lucent had a loss of US$ 1.02 billion, and it is currently in the final stages of negotiating an important US$ 6.5 billion line of credit from banks to bolster its US$ 3.8 billion cash balance. Demand remains strong for fibre cable, a thin wire of glass through which data is transmitted in the form of light. Corning, the industry leader, has been running at full capacity since 1998, and plans to add 85% more capacity over the next three years. Citing the capital crunch for telecom carriers and the economic slowdown, Corning recently slashed some revenue-growth forecasts for the year. It is unclear at this juncture what company might bid for Lucent“s optical unit. Likely suitors might include some Lucent rivals, including Corning and Alcatel, the French equipment maker. Some analysts, however, are skeptical of a sale to Corning, saying a purchase might trigger antitrust concerns. It has been noted that a combined Lucent-Corning fiber operation would control upwards of 75% of the market. In an interview last week, Corning Chief Financial Officer Jim Flaws wouldn“t comment on such a deal. Separately, Lucent yesterday revealed more details of the planned spinoff of its Agere microelectronics unit. The company said it now expects the price of 370.3 million shares to be between $16 and $19 per share, instead of the original range of $15 to $20 each. At the midrange of $17.50, that would value Agere“s offering at nearly $6.5 billion. In a filing with the Securities and Exchange Commission, Agere said it wasn“t involved in a SEC investigation into Lucent“s accounting practices.