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Network hardware industry

Lucent Technologies and Ascend Communications Merger Talks: Impact on Internet Development

Strategic Insights

— 1 min read

Lucent Technologies, the former Bell Labs unit spun off by AT&T, is reportedly engaged in merger talks with Ascend Communications, a leading supplier of Internet and computer networking gear. The proposed acquisition, valued at up to $16 billion, could accelerate the development of products for making online telephone calls, further integrating the Internet into everyday life. The merger would give Lucent the powerful computer switches it needs to compete with Cisco Systems Inc. in the market for Internet equipment sold to phone companies.

Key Takeaways:

  • Lucent Technologies is reportedly in merger talks with Ascend Communications, valued at up to $16 billion.
  • The acquisition could accelerate the development of products for making online telephone calls.
  • Ascend's stock rose $5.25 to $76.68 3/4, while Lucent's shares fell $2.31 1/4 to $112.93 3/4.
  • Lucent's acquisition of Kenan Systems Corp. for $1.5 billion in stock, makes software for phone companies to send one bill combining traditional calls with wireless, cable TV, and other services.
  • Analysts say that competition between Lucent and Cisco Systems Inc. will result in speedy product development, adding to technology to make phone calls via the Internet.
  • Ascend's market value is $16.64 billion, with $1.5 billion in annual sales.
  • Craig Johnson, principal analyst with Pita Group, says that if Lucent buys Ascend, it will "fill a key hole in their product line."
  • Phone-equipment makers like Lucent are looking to sell more networking equipment to telecommunication providers, which face growing Internet traffic.

Statistics:

  • Lucent's proposed acquisition of Ascend Communications is valued at up to $16 billion.
  • Ascend's stock rose $5.25 on the news, closing at $76.68 3/4.
  • Lucent's shares fell $2.31 1/4 on the news, closing at $112.93 3/4.
  • Ascend's market value is $16.64 billion, with $1.5 billion in annual sales.
  • Kenan Systems Corp. had $175 million in sales last year.
  • The proposed acquisition would give Lucent the powerful computer switches it needs to compete with Cisco Systems Inc. in the market for Internet equipment sold to phone companies.

Sources:

  • USA Today
  • Financial Times of London

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