Alcatel-Lucent Sells Genesys Business, Enterprise Unit Stays


Alcatel-Lucent on Wednesday confirmed it will divest its Genesys contact center unit but retain and continue to build its enterprise networking unit, ending speculation that a sale of the enterprise unit was imminent. Specifically, Genesys will be sold to European private equity firm Permira for what Alcatel-Lucent said is a binding offer of $1.5 billion.

Genesys, which Alcatel acquired in 2000, houses Alcatel-Lucent's contact center and customer service software products, and had about $500 million in sales in 2010, according to the company.

The sale to Permira, expected to close by the beginning of 2012, will mean a transfer of about 1,800 employees, and the management team and Genesys' existing business structure will remain in place. Genesys and Alcatel-Lucent's enterprise unit will conitnue to have a commercial relationship, along with a joint development agreement and access to each other's portfolios.

As for the Enterprise unit itself, Alcatel-Lucent plans to keep it. Alcatel-Lucent in July said it was "exploring options" for the enterprise networking unit, following months of speculation that it would look to sell or spin-off the unit. Enterprise represents about 10 percent of Alcatel-Lucent's annual revenue.

Ben Verwaayen, CEO of Alcatel-Lucent, said that retaining and strengthening the enterprise business is what makes the most sense for customers.

"Our chosen direction is to leverage the natural connections that exist between enterprise and carrier customers and proactively apply Enterprise's strengths and momentum in unified communications and data networking with them," Verwaayen said in a statement.

Analysts saw mixed blessings in Alcatel-Lucent's decision.

"The deal gives ALU much-needed cash to focus on its core businesses of selling equipment to major global telecom operators," wrote Sheryl Kingstone, director of Enterprise Research at The Yankee Group, in a Wednesday blog post. "However, the question remains: Is there enough growth in hardware without a strategic play in applications and software? While the parties will keep a strong commercial relationship, I do hope ALU still continues to focus on the business benefits of improving customer experience -- something Genesys understands very well."