Fiber for sale

(Telephony) Lucent Technologies could put its optical fiber solutions business unit up for sale over the next two weeks, according to today’s The Wall Street Journal.

The unit, which competes with Corning for the top spot in fiber manufacturing, is the one division of Lucent that has seen growth over the last year, reporting a 60% increase for 2000. Despite this positive growth in a sea of negativity, putting the division up for sale could be a good thing, according to Maribel Dolinov, senior analyst for Forrester Research. Lucent needs a focus on something, she said. "It’s not enterprise. It’s not fiber optics. It’s not microelectronics. So they’re down to data networking for carriers."

While the company may have seen growth in revenue in the fiber division, that growth does not translate into growth from systems sales as well. Carriers don’t use Lucent as a one-stop shop, Dolinov added.

Lucent would not comment on the rumored sale of the unit. "[A rumor] is all it is at this time," said a spokesman for the company.

Some analysts predict the value of the unit to be at $8 billion, while others say the value could be closer to $4 billion. "The issue is who will be the bidder," said Dolinov. "There aren’t an extraordinary amount of suitors."

Nortel Networks and Cisco Systems are unlikely candidates, said Dolinov. And an offer from Corning could pose antitrust issues. "I don’t know if they’ll let Corning take it," she said. "But in an environment like this one that’s all about scale, they may say, ‘Oh, what the hell?’"

Other suitors may include Alcatel, Siemens, Fujitsu or NTT, said Dolinov. But a stock deal with a company that’s traded on foreign market could be problematic. And coming up with $4 billion in cash would be equally as difficult, she added.

This is not the best time for a stock transaction, said Dolinov. However the company has not given a time frame for the sale and may take its time entertaining offers until the right one comes along, she said.

Lucent’s optical fiber solutions unit is a 6,000-person unit based in Norcross, Ga.

Separately, Lucent’s microelectronics unit spin-off Agere Systems announced yesterday that it might report a loss in the second quarter due to cancelled orders from its large customers including Lucent, Nortel, Motorola and Cisco.