Lucent-Alcatel merger closes book on piece of N.J. history
(Record, The (Hackensack, NJ) (KRT) Via Thomson Dialog NewsEdge) Apr. 3--The merger between Lucent Technologies and French telecommunications parts maker Alcatel SA makes sense for both companies, several former Lucent employees observed on Sunday -- but not without a trace of wistfulness for a company steeped in New Jersey history.
"There is a certain amount of sadness because a lot of us put our hearts, bodies and souls into making it and keeping it a great company," said Lincroft resident John G. Allen, who accepted a retirement package in 2001 after nearly 15 years with AT&T and its spinoff Lucent. "When we joined, it was a great company -- AT&T. So it's sad to see that go."
Lucent was carved out of AT&T in 1996 and quickly emerged on its own as a leading innovator of telecommunications technology.
But the company has struggled since the technology bubble of the late 1990s burst. Since then, Lucent has eliminated thousands of jobs and seen its stock price plummet 95 percent from an all-time high of about $65 in 1999. The shares closed at $3.05 on Friday.
Under the agreement announced Sunday, Alcatel will acquire Murray Hill-based Lucent in an exchange of stock valued at $13.4 billion. The combined company will have its headquarters in Paris, and its name has yet to be decided.
The companies said about 8,800 jobs are expected to be lost and the cuts will be spread equally throughout the merged operations.
Allen, while lamenting Lucent's descent from dominant industry leader to battered takeover target, said both companies stand to benefit by joining forces.
"Alcatel gets a foothold here in the United States and Lucent gets all that money," he said.
"The entire industry is consolidating and the only way for equipment makers to survive is to consolidate. That's the conventional wisdom that you hear," added Bill Hyland, 50, of Whitehouse Station, who spent 18 years with AT&T and Lucent.
Hyland noted that the telecom industry's legacy in New Jersey has shifted along with the technological landscape.
AT&T, and later Lucent, once promised "the tradition of a secure place to work, a place where you could start your career and finish it. But the legacy of a telecom being able to provide that went away with the transformation of the industry," he said.
There is concern among former employees that Alcatel could further scale back on retiree benefits. In 2004, Lucent eliminated a portion of its retirement benefits package that covered the dependents of certain management retirees.
Lucent spokesman John Skalko said it's too early to determine what might happen to retirees' benefits under the new combined company. "It's impossible to say at this time," he said.
During a conference call Sunday, company executives said the acquisition will lead to $1.7 billion in savings within three years to be generated through consolidating support functions, leveraging research and development and services across a larger base and cutting about 10 percent of their combined worldwide workforce of about 88,000.
Lucent employs about 6,400 people in New Jersey.
Intense competition within the telecom equipment market prompted the deal, the companies said.
Analysts have said the two would be a good fit, and that the combined company would be better able to resist pricing pressures from the larger telecom service providers emerging from a new wave of consolidation in the sector.
Lucent Chief Executive Patricia Russo will lead the new company. Alcatel Chairman and CEO Serge Tchuruk will become non-executive chairman.
Talks between Alcatel and Lucent broke off in 2001 after Lucent officials backed away at the eleventh hour amid worries the deal seemed more a takeover than a merger.
Though the companies called the pending deal a "merger of equals," under the terms of the transaction Alcatel shareholders will hold about 60 percent of the new company and Lucent shareholders about 40 percent, the companies said.
Paris-based Alcatel has more revenues and employees, but Lucent is slightly more profitable.
In a move apparently aimed at addressing any U.S. security concerns about Bell Labs -- Lucent's research arm, which does sensitive work for the Pentagon -- the companies said they planned to form a separate, independent American subsidiary holding contracts with U.S. government agencies.
The unit would be separately managed by a board of three U.S. citizens acceptable to the U.S. government, the companies said.
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