Jersey to be Alcatel/Lucent’s R&D HQ

Though the combination of Lucent Technologies and Alcatel will be headquartered in Paris, its global research and development center--as well as its North American operations base--will be housed in Lucent’s current offices in New Jersey with the operations of Bell Laboratories.

The decision is good news for the Garden State, which recently lost AT&T’s headquarters to San Antonio, Texas, when the company merged with SBC Communications.

A combined Lucent/Alcatel--which, by the terms of the merger agreement, cannot be solely called either Alcatel or Lucent--will split its business more evenly between continents than either company did on its own. In 2005, half of Alcatel’s revenue came from Europe and only 14% from North America. Lucent is nearly the opposite, taking 66% of last year’s revenues from North America and only 13% from Europe. But combined, they would have reported 35% of their revenue from Europe and 34% from North America.

Regarding Bell Labs operations that relate to sensitive matters of U.S. national security, Alcatel and Lucent will form an independent entity to continue those operations. But the terms of that agreement have not yet been reached, the two companies said in regulatory filings this week. Three U.S. citizens will be appointed as special directors to oversee that entity. To fill those three seats, Alcatel and Lucent have already nominated former U.S. Secretary of Defense William Perry, former U.S. Central Intelligence Agency director R. James Woolsey and former National Security Agency director Lt. General Kenneth Minihan. Those nominations are subject to U.S. government approval.

Duncan Hunter, chairman of the U.S. House of Representatives’ armed services committee, recently wrote a letter to President Bush expressing “several grave concerns” surrounding the national security implications of the Alcatel/Lucent merger.

The two equipment vendors have both agreed in principle to accept some restrictions or make some divestitures if needed to overcome objections to their merger. However, the registration filing said, “Neither Alcatel nor Lucent shall be required to divest a significant portion of the assets of Bell Laboratories.”

Bell Labs employs about 9,000 people and provides research and development for all of Lucent’s product segments. The core research group includes about 1,100 employee