Alcalucentel

In the ever shrinking telecom industry, today comes the news that Alcatel and Lucent are merging. Merging? How is it that a company on the downhill merges with a company with higher revenues and sales? It should be an outright buyout by Alcatel, if you ask me. On top of this news, the combined company (which is yet to be named - I suggest Alcalucentel) would be headed by Pat Russo, the Lucent CEO. Really? Weird! Oh, btw, they are going to let go 8,800 more employees.

At one point of time (back in 2000), Lucent was the largest employer in New Jersey with close to 120,000 employees - even larger than the state government. Now they have about 30,000. I know a lot of ex & current lucent employees who are disappointed at the Lucent Management and its conduct during the past five years.

I think this is going to accelerate the mergers and acquisitions in the telecom world. Ericsson may eye Juniper or a similar company. Motorola also has a lot of cash and may go on a shopping spree - may even pluck UTStarcom (hey, its cheap!). I'd think Foundry, Sonus & some more equipment vendors would be on the shopping block. Also, watch out for Cisco & Nokia!

Now, on this deal: Either I don't understand how Wall Street mergers work or this is an after-effect of the UAE DP Ports deal. I tend to think its the latter. They have also said that Bell Labs (which does a lot of US government research) would be spun off as a separate company to be headed by US citizens. So is this going to be the new reality? If a foreign company acquires an US company, the combined company better make sure that they are not inviting scrutiny (read: backlash) by appointing US citizens as CEOs!