Lucent looks forward to a return to the good times

Lucent's Jim Kane insists that reorganisation will leave the company well placed to benefit in a booming telecomms equipment market.

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By  David Ingham Published  October 18, 2000

Lucent Technologies is spinning off slow growing businesses and reorganising key divisions as it seeks to put its revenue growth back in the double digits.

The telecomms equipment maker's biggest move so far is the spinoff on October 1 of 'non-strategic' products, such as call centres, into an independent company called Avaya.

In the background, Lucent is undertaking a shakeup of its crucial optical networking division, in an effort to improve that business's ability to turn great technology into viable products. Capping all that will be a spinoff of the company's microelectronics products next year.

Once that's all done, Lucent believes it will emerge a more nimble organisation better placed to focus on the enormous business opportunities being created by telecomms deregulation and rapid technological change. And as a result, it expects growth to return to the double digits and for its languishing stock to come back to life.

"The business is being driven by the expectations of its shareholders," says Jim Kane, Lucent's channel manager for the Middle East and Africa. "If the business is growing 8% and the market expects it to grow in the high double digits, you have to take some decisions."

If Lucent is to achieve its goals, then Kane's business unit has to seriously perform. Although Lucent still does the lion's share of its business directly with clients, sales through third party partners are climbing by 200% per year in Europe, Middle East & Africa, according to Kane. "The corporation is asking us to grow even faster," he says.

In Lucent's model, direct in-country teams take care of major telecomms infrastructure projects like Saudi Arabia's recent $4 billion TEP6 project. It's left to local partners to take care of the smaller but far more plentiful projects at the Internet service providers and wireless service providers that are sprouting up across Kane's region.

This is especially so in deregulated markets, mainly in Africa, where numerous Internet service providers, application service providers, and data hosting centres are opening for business. "With the historical business, Lucent went in [direct] and built a network for Saudi Telecommunications Company," explains Kane. "There aren't going to be so many of these huge types of projects going forward. We see more and more of our business turning towards partners."

Kane believes that future business will come both from startups building new networks and incumbents upgrading existing infrastructures to take advantage of new transport technologies. Kane said that there are already tenders out for the construction of mobile telephone networks in central Africa and in South Africa there are over one hundred ISPs now competing for business.

Kane insists that the new Lucent is extremely well placed to gobble up its fair share of this booming business. What might hold it back is a failure to get products to market quickly enough and an unwieldy, slow culture.

Its problems in getting products to market have been most apparent in optical networking. To cut a long story short, optical technology allows service providers to increase data transfer capabilities by pumping data across fibre-optic cables as beams of light.

Kane acknowledges the importance of optical technology going forward, insists that Lucent's technology leads the world, but admits to problems getting products to market. "I would push the issue that we're leading in optical networking, but not in delivery," says Kane. The answer is a, "total reorganisation of our optical networking division."

His business, he says, isn't hamstrung by the slow culture that Lucent inherited from the days when it was part of AT&T. He says that constant pressure from partners and the sheer speed of the telecomms business leaves no room for lethargy. "In the business I'm involved with, dealing with partners, we're very fast moving and fast growing," he insists. Although he adds, "We still suffer from not having product quick enough to market, but I believe that will be addressed."

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