Taking a cue from its past, Lucent Technologies Inc. announced it plans to spin off segments of the company in an attempt to streamline its operations.
The communications equipment manufacturer originally was spun off in 1996 from AT&T Corp. in a move by the telecom giant to meet the rapidly changing needs of the telecommunications market.
According to Lucent, its latest move will allow the company to transition its global equipment manufacturing operations to focus on high-end process manufacturing and systems integration, including new product introductions, supply chain management and system testing.
“Today there are companies whose sole business is manufacturing sophisticated electronics equipment,” noted Richard McGinn, chairman and chief executive officer of Lucent. “They can provide us with the high-quality products and flexibility we need to increase our speed to market and improve our cash flow.”
McGinn noted the company would continue to manufacture high-end semiconductor, optoelectronic and fiber optics since it would be virtually impossible to duplicate that level of high-tech manufacturing capability.
Lucent’s first action was to sell off its point-to-point microwave radio business unit to Harris Corp., a communications equipment company.
The transaction, which involves Lucent’s Microwave Digital Link product line, includes the operations headquarters outside of Paris. Lucent will continue to manufacture products for the MDL product line in a facility in Rouen, France, under a two-year agreement and purchase MDL products from Harris for an additional five years.
Lucent also released financial results for its second fiscal quarter ended March 31, showing a 41-percent increase in net income to $754 million from a year ago.
Company revenue grew from $8.7 billion in the second quarter of 1999 to $10.2 billion this year, with net income per diluted share rising from 17 cents per share to 23 cents per share, beating analysts estimates of 22 cents per share.
News of Lucent’s plans played well on Wall Street. The company’s stock increased more than $10 following the announcement to about $63 per share. Lucent’s stock was hit hard late last year when the company reported difficulty in meeting demand for optical communications gear and delays in fulfilling several big contracts.
