Friday, March 24, 2006
In what could be the latest blockbuster in the communications market, Alcatel SA and Lucent Technologies Inc. late Thursday (March 23) confirmed that the two companies are in merger talks.
The deal could potentially create a communications powerhouse, with combined sales of more than $25 billion.
“We can confirm that Lucent and Alcatel are engaged in discussions about a potential merger of equals that is intended to be priced at market,” according to a statement issued by the companies.
“There can be no assurances that any agreement will be reached or that a transaction will be consummated,” according to the companies. “We will have no further comment until an agreement is reached or the discussions are terminated.”
The communications market has already seen one mega-merger in 2006. Earlier this month, AT&T Inc. acquired rival BellSouth Corp. for $67 billion.
Meanwhile, Alcatel of France and Lucent of the United States are no strangers to each other. In 2001, the companies were on the verge of a $23 billion merger, but the talks fell apart.
After spinning off from AT&T in 1996, Lucent was once a high flyer in the booming communications equipment market. But the company has fallen on hard times. In January, Lucent reported a first-quarter loss of $278 million as sales fell $21 million from a year earlier to $2.05 billion, due to the slumping China market.
Communications company Lucent lowered its fiscal 2006 year guidance, calling for revenue to increase in the low single digits rather than mid single digits as forecast previously.
French telecommunications equipment maker Alcatel recently paid its first dividend in four years on the back of better-than-anticipated profits at almost all of its divisions, but in particular broadband access and mobile infrastructure.
Fourth-quarter profits jumped to 541 million euros ($655 million) from 466 million euros ($564 million) a year earlier. Sales rose 7.6 percent to 4.1 billion euros, and the operating margin climbed to 13.2 percent from 12 percent in the year-ago quarter.
For the year as a whole, revenues increased from 12.2 billion euros ($14.8 billion) in 2004 to 13.1 billion euros ($15.9 billion) last year.
The company said its results were helped by a turnaround in its fixed-line business on increased demand for "triple play" services that operators use to offer a mix of voice, data and video.
By: DocMemory
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