Lucent fills out remote access strategy

Lucent Technologies filled in one of the last remaining gaps in its data access strategy last week by acquiring Livingston Enterprises for $650 million in Lucent stock.

The deal, which is expected to close before the end of the year, gives Lucent a toehold in the remote access market and puts the company in direct competition with market leaders Cisco Systems and Ascend Communications. Livingston, while not as high-profile as its two competitors, still has managed to develop a customer base of 2200 mostly small and regional Internet service providers and had annual revenues in 1996 of $48 million.

"The reason that we're not well-known is we've had a very focused marketing effort," said Steven Willens, Livingston's president and chief executive officer. He will remain head of the new division, and the company will stay in Pleasanton, Calif.

Livingston's strength in serving smaller ISPs will fit well with Lucent's recently announced data strategy, which focuses on larger providers such as telcos, said Harry Bosco, president of Lucent's Broadband Networking Group. Additionally, within the next two years Lucent will start to integrate Livingston's next generation of products into Lucent's product line. "It's really looking at the end-to-end. This access gateway really is going to be an opening for the 5ESS," said Bosco.

Analysts, however, hammered the deal, saying the company paid too much for a company that only provides low-cost, medium-density solutions. "What they should have done is bought Ascend," said Maribel Lopez, an analyst with Forrester Research who also mentioned Bay Networks as a better fit.