Alcatel-Lucent makes equipment that connects communications networks around the world. The company's core network products unit makes network switching and transmission systems for wireline and wireless networks, terrestrial and submarine optical systems, microwave radio products, and fixed-access gear. Its access segment focuses on wireless and fixed access equipment for broadband services that provide systems with high-speed and high capacity. It provides customers with services ranging from application and systems integration to managed services and maintenance. In April 2015, Alcatel-Lucent accepted a $16.6 billion purchase offer from Nokia.
Change in Corporate Type
In April 2015 Alcatel-Lucent accepted a buyout offer from Nokia, another large telecommunications equipment maker. The $16.6 billion deal, expected to be completed in early 2016, would create the world's second biggest telecom equipment company behind Sweden-based Ericsson. Both Nokia and Alcatel-Lucent, based in France, have seen brighter days, but their combined $27 billion in revenue should provide them with the resources to compete against Ericsson, Huawei, Cisco, ZTE, and Samsung.
Alcatel-Lucent’s access segment generates 54% of the company’s revenue with the rest coming from the core networks segment. The wireless business in the access segment accounts for 35% of the company’s overall sales. The next highest revenue producer is the IP routing business in the core networking segment with 18%.
Based in Paris, France, Alcatel-Lucent has operations around the world. The company operates Bells Labs in New Jersey. The biggest source of sales for Alcatel-Lucent is the US with 41%, followed by Europe with 23%, and the Asia-Pacific region with 20%.
Sales and Marketing
The company’s 10 biggest customers accounted for 54% of its revenues in 2014. Verizon was the largest single customer, accounting for 14% of revenue, followed by AT&T, 11%, and Sprint, 10%.
Revenue dropped about 20% in 2014 from 2013 as both of its reporting segments posted lower sales. Two Alcatel-Lucent businesses that grew in 2014 were IP routing, up 5.1%, on greater sales of routers that support video transmission, and wireless access, 4% higher, on sales of its LTE equipment. By region, sales in China grew 22% while sales declines in most other regions. While Alcatel-Lucent posted a loss in 2014, it was not as deep as the loss it reported in 2013.
Alcatel-Lucent has been implementing a corporate restructuring it calls the Shift Plan. The program is intended to turn the company into a specialized provider of IP and cloud networking and ultra-broadband equipment and services. Alcatel-Lucent seeks to take advantage of shifts to cloud computing, mobile phone and Internet use, and connecting devices around the Internet.
The plan is to save money by cutting costs as well as generate revenue through the sale of some assets. The company is focused on producing technologies that improve the speed and capacity of mobile of networks carrying more traffic, especially video content. Alcatel-Lucent researchers are working on the hardware side and with software to make networks more efficient as well as increase capacity.
The company demonstrated its strategy with the deployment of an Enterprise Small Cell device at Telus, a Canadian telecommunications company. The Small Cell device is designed to expand and improve connectivity for LTE, 3G, and Wi-Fi technologies in densely populated office buildings and other areas of network congestion.
As part of the Shift Plan, Alcatel-Lucent sold businesses that don’t fit the company’s strategy. In December 2014, the company sold its cyber-security services business to Thales for a cash price of €41 million. The sale of the company’s Enterprise business to China Huaxin came in September 2014 for a cash price of €205 million. And in March 2014 Alcatel-Lucent sold LGS Innovations for €81 million to a U.S.-based company owned by a Madison Dearborn Partners-led investor group.