Alcatel-Lucent 'Exploring Options' For Enterprise Unit


Alcatel-Lucent hasn't quite indulged rumors that its enterprise networking unit is for sale, but the company is "exploring options" -- including a possible sale to a third party.

In a vaguely worded statement released Wednesday, Alcatel-Lucent said it was open to a number of possibilities.

"All options are being explored including discussions with third parties," said the statement, which wasn't attributed to a particular spokesperson. "In conjunction with this ongoing review, and in application of local legal requirements, Alcatel-Lucent is [Wednesday] holding meetings with employee representatives of its Enterprise business. No decision has been made on the options being explored and there is no certainty that this review will result in any change to the Alcatel-Lucent Enterprise business."

Rumors that Alcatel-Lucent would look to sell or spin-off the unit first surfaced in April. HP, Microsoft and private equity firms were at the time mentioned as potential buyers of the business, which is said to be worth about $1.5 billion but represents less than 10 percent of Alcatel-Lucent's annual revenue.

The move would be significant for the channel, however, because the enterprise unit houses phones, switches, SIP-compatible call center software and other products sold by Alcatel-Lucent VARs and integrators.

In a brief note to contacts, Steve Hilton, principal analyst with Analysys Mason, said the move was long overdue for Alcatel-Lucent.

"Is this confirmation from ALU a surprise? Yes. They should have sold the division two years ago and I'm sure they would have sold it had markets been stronger," he said.

Hilton said the enterprise unit is "tertiary" to Alcatel-Lucent, which focuses primarily on service provider markets. Possible buyers, he said, could include Siemens, which would look to consolidate its European market share, or Huawei, which would build a footprint in Europe. But it'll most likely be a private equity buyout, Hilton said, "similar to the way Avaya went private a few years ago."

Alcatel-Lucent was formed in 2006 following Paris-based Alcatel's $11 billion acquisition of Lucent Technologies. Lucent, which was a successor to AT&T's former telco equipment manufacturing division, spun off its own former enterprise division as Avaya in 2000.

The company has seen a number of major executive changes in recent years, and this week confirmed several more. Adolfo Hernandez was named president of Alcatel-Lucent's newly formed software, services & solutions business group. Replacing Hernandez as president, EMEA, is Stephen Carter, who is also hanging on to his global marketing and communications responsibilities.

Jeong Kim, president of Bell Labs, Alcatel-Lucent's research and development subsidiary, will now run Alcatel-Lucent's corporate strategy as well. Robert Vrij, president, Americas Region, is also taking over responsibility for Alcatel-Lucent's strategic alliances, including the company's 10-year converged infrastructure alliance with HP that was launched in 2009. Services President Vivek Mohan is leaving Alcatel-Lucent, the company also confirmed.