Lucent: Down But Not Out

Frisky070802 writes "Forbes has an article about the "new" Lucent. It discusses how Lucent is trying to follow in the path of IBM by transforming itself from an equipment provider to a provider of services, even to companies using equipment from competitors. Patricia Russo, the CEO, claims that Lucent has turned the corner and proven it can survive. The article quotes a few statistics on just what has survived: for instance, revenues down from $28.9B in FY2000 to an expected $8.9B in FY2004, and headcount dropping from 157K to 32.5K over that time." Lucent has fascinated me, simply because they were so well setup, but then floundered for *years*, but have a great amount of interesting technology at their core.

Comments

Blame "The Angel Of Death"

[pandrijeczko]

Go take a look at HP's share prices recently and then you'll understand who's responsible.

I worked for Lucent during the Fiorina years and I saw it decline from a great company to one that was brought down to its knees - sure, the dotcom bust was part of the reason but Fiorina's "dubious" business practices didn't help. Whatever anyone says, she was kicked off the Lucent board and how she ever got to HP is beyond my comprehension - well, one idea springs to mind but it involves a casting couch.

I hope Lucent pick themselves up again - the heavy investment in 3G technology did not help their recovery - as they have the Bell Labs heritage (along with Avaya) and a more rounded workforce than IBM, albeit much smaller.

IBM is very good with server technologies and web integration stuff but Lucent has the better telecoms and networks skills and is probably well placed to offer services in those areas.

As for HP the sooner they kick out Fiorina, the better - I wouldn't trust that woman to run a hotdog stall, let alone a global company.

Economic cycles

[talaphid]

So... a company did really well during a boom, didn't expect the - let's go with at least a century of data - inevitable bust, and ended up in the fiscal doghouse. The bust is showing faint signs of turning into a boom, and a company lasted long enough to see the dawn. I hope I'm not abstracting a little too much for everyone's taste, but I'm just amazed at how this sort of 'news' borders on anything more than a madlib.

OTOH, it is Lucent. I am confused by the matching corporate-think cycle regarding slimming to 'core business' and 'diversification', which has had profitable units dropped because they weren't the "core business". I realize this comes with a nice immediate fiscal gain, but... so would selling the whole company, or firing all the employees.

Lucent, if I understood properly, was a victim of both this 'core business' nonsense along the need for capital by its parent business unit. I think of Lucent as an innovator, and it seemed set up for failure. So... yippee! Pat yourselves on the back, Lucent. I do find it mildly amusing that their future will be neither a 'core business' nor 'diversification', but rather, (minding) other people's business.

Now if you'd like to credit me the value of shares at the price I originally paid for them...

Re:Hmmm...

[EpsCylonB]

How good is Lucent at playing nice with the OSS community? Been so long since I saw some of their stuff out on the market. Could be one way to improve their image, like Apple and IBM improved their images a bit when they adopted free or *nix software.

Where is the money ?

Revenue per employee is up

[nickovs]

...for instance, revenues down from $28.9B in FY2000 to an expected $8.9B in FY2004, and headcount dropping from 157K to 32.5K over that time.

To see the glass half full for a moment, consider these numbers. The revenue per employee is up from $184K to $274K, about a 50% rise. Given the salaries and other indirect employment costs are a very large part of the overheads in a company the size of Lucent, and that Lucent lost many of those employees by selling off divisions rather than through lay-offs, this seems like a sign of fairly good management.

Re:Revenue per employee is up

[Anonymous Coward]

> this seems like a sign of fairly good management.

Short-sighted analysis. They accomplished the increase in revenue/employee by cutting their development staff to the point that they can no longer sustain development in key areas.

In short, they are toast. Carrier's aren't going to hire Lucent to tell them how to integrate Juniper and Cisco gear in their network. And if Lucent plans on going after the enterprise market (who actually do need services support), they are going head-to-head against IBM and HP.

Lucent is collapsing. I'm glad I don't depend on them for my pension. A lot of good people are going to face a lot of financial harm brought on by the management of LU.

Re:Revenue per employee is up

[magarity]

To see the glass half full for a moment

The glass is actually less than empty in Lucent's case. Consider these key stats. Particularly near the bottom where it says "Book value per share" and notice that this number is negative. This means that if the company closed the doors and sold off all of its assets (factories, accounts receivable, existing inventories, patent rights, etc) it would still owe. This is a Bad Thing. Furthermore, free cash flow is also negative, to the tune of 680 million. This number is money coming in minus money going out; a pretty straight foward calculation. While you can have negatives in other accounting statements like the balance sheet, as long as free cash flow is positive the company can still have a decent chance.

Apple OEMs from Lucent

[sjbe]

both devices are also a sort of a sample of the general technical culture for both companies. And guess which company's products I'll tend to buy in the future...

You do realize that Lucent makes (or made) the electronic guts for the Airport, right? Granted, Lucent may not be winning any awards for industrial design, but in a very real way these products were both made by Lucent. Not such an easy decision is it?