Lucent Technologies Inc. to End Joint Venture, Analyst Ratings Released

Strategic Insights -

Lucent Technologies Inc. has announced its plans to end its joint venture with Royal Philips Electronics, effectively regaining control of its 40 percent stake in the business. The joint venture, formed in 1997, markets leading corded and cordless phones and answering machines in the US. Analyst Richard J. Moroney, editor of Dow Theory Forecasts, has rated Lucent "accumulate," citing struggles to penetrate the cellular handset market. Meanwhile, AT&T Corp., the parent company of Lucent, will take a $137 million after-tax charge in the third quarter related to a tender offer for Teleport Communications Group.

Key Takeaways:

  • Lucent Technologies Inc. is ending its joint venture with Royal Philips Electronics, a move that will allow the company to regain control of its 40 percent stake in the business.
  • The joint venture, formed in 1997, markets leading corded and cordless phones and answering machines in the US.
  • Analyst Richard J. Moroney has rated Lucent "accumulate" based on its struggles to penetrate the cellular handset market.
  • AT&T Corp. will take a $137 million after-tax charge in the third quarter related to a tender offer for Teleport Communications Group.
  • The company will sell its portion of the venture, formed on October 1, 1997, and continue to make the products and leasing service available through existing outlets until a buyer can be found.
  • Lucent will close down its wireless handset portion of the venture.
  • Analyst Richard J. Moroney has also rated AT&T "buy" and AlliedSignal "buy" in his October 26 newsletter.
  • AlliedSignal has made a $44.50-per-share, or $9.8 billion, bid for Harrisburg-based AMP Inc.
  • The company's increasing reliance on its aerospace segment adds to the risk of a profit shortfall should the aerospace boom slow.

Statistics:

  • Lucent Technology Inc. employs approximately 5,000 people in the Lehigh Valley.
  • The joint venture's portion of the business includes leading corded and cordless phones and answering machines in the US market, as well as a telephone leasing business.
  • AT&T Corp. will take a $137 million after-tax charge in the third quarter related to a tender offer for Teleport Communications Group.
  • AlliedSignal has made a $44.50-per-share, or $9.8 billion, bid for Harrisburg-based AMP Inc.
  • The stock prices for Lucent, AT&T, and AlliedSignal closed at $90.12-1/2, $63.37-1/2, and $42.50, respectively, on Friday, up $2.25, $1.62-1/2, and $1.

Sources:

  • Bloomberg News
  • The Morning Call
  • Dow Theory Forecasts newsletter
  • Lucent Technologies Inc. press release
  • AT&T Corp. press release
  • AlliedSignal Inc. press release
  • Moroney, Richard J. (October 26, 1997). "Market Outlook" newsletter.