Following months of speculation, Lucent Technologies said Tuesday that it had
agreed to sell its fiber-optic division to Japan-based Furakawa Electric Co.
Ltd. and Corning Inc. for the bargain price of $2.75 billion.
Earlier speculation was that Lucent would sell the unit for more than $5
billion.
Under terms of the deal, Furukawa will fork over $2.525 billion for a
majority share and Corning will pay $225 million to get Lucent's interest in two
joint ventures in China: Lucent Technologies Shanghai Fiber Optic Co. Ltd. and
Lucent Technologies Beijing Fiber Optic Cable Co.
Additionally, CommScope Inc. said it would form two joint ventures with
Furukawa: one for the fiber cable portion of Lucent's fiber-optic business and
one for the transmission-fiber portion. CommScope said it would invest about
$650 million for its ownership in the two joint ventures.
CommScope will own 51 percent of the fiber cable joint venture, which
includes cable and transmission-fiber manufacturing. The cable joint venture
will also acquire Lucent's 51 percent piece of Fitel, a loose-tube cable joint
venture jointly held by Furakawa.
Furukawa will own 51 percent of the transmission-fiber joint venture. Up to
$250 million of Furukawa's payment to Lucent may come in CommScope securities,
the companies said.
'We're pleased to have received the best value for this business under
difficult market conditions,' Lucent executive vice president Bill O'Shea said
in a press release.
Lucent's fiber division employs 6,000 people and it is based in Norcross,
Ga.
Pending regulatory approvals, the deal is expected to close toward the end of
the third quarter. The sale of Lucent's fiber interests in China is subject to
other approvals, including that of the Chinese government, the companies
said.
Separately, Lucent said it plans to cut between 15,000 and 20,000 more jobs
as part of its ongoing streamlining measures. Lucent has axed about 19,000
positions since January. With the latest round of layoffs, Lucent's employee
roster will have been slashed by 32 percent.
Lucent said it will take a $7 billion to $9 billion hit in the fourth quarter
related to the layoffs, with about $2 billion of the charge cash-related.
For the third quarter, Lucent said it lost $1.89 billion, or 55 cents per
share, excluding discontinued operations. The company posted revenues from
continuing operations of $5.82 billion, down from $5.9 billion in the previous
quarter.
