The unit could fetch up to US$1.2 billion, and potential buyers include Cisco Systems Inc., Hewlett-Packard Co., Avaya Inc. and private equity firms like the Gores Group, according to a story in Reuters. Alcatel-Lucent is meeting with prospective buyers in San Francisco this week, according to Reuters, which cited unnamed sources.
Reuters says the frontrunner in the talks is Siemens Enterprise Communications (SEN), which is 51 per cent owned by Gores. SEN and Gores acquired enterprise switch maker Enterasys in 2008.
Alcatel-Lucent is looking to turn around flagging financials in the wake of a difficult merger between France’s Alcatel and the U.S. telecom equipment company Lucent in 2006. Since then, the value of the combined company has decreased and Alcatel-Lucent has struggled financially.
Qatalyst Partners is advising Alcatel-Lucent on the sale, according to Reuters. Alcatel-Lucent has asked for indicative bids by early May and has requested cash offers, but the deadline could move around depending on the number of parties expressing interest, according to the report.
Any buyer would acquire a business that’s been stagnant in Ethernet switching and IP telephony for many years. Alcatel-Lucent’s share of the roughly US$18.7 billion worldwide Ethernet switching market has been less than 1.5 per cent for three years, according to Dell’Oro Group, placing them as the eighth or ninth leading vendor.
Cisco dominates that market with a 70 per cent share, while HP is second with 10 per cent.
Recently, Alcatel-Lucent has introduced some enterprise and data centre switches which have impressed analysts in that market. The OmniSwitch 10000 is a 5 Tbps core switch designed for 40/100G Ethernet support, and the OmniSwitch 6900 top-of-rack switch plays a pivotal role in Alcatel-Lucent’s data centre architecture.
In enterprise telephony, Alcatel-Lucent is fourth with an 8.9 per cent share of the US$12 billion market in 2010, according to Dell’Oro. But that’s down from 9.9 per cent in 2008, while leaders Avaya and Cisco and fifth place NEC have gained share since then.
Siemens is third in telephony with a 10 per cent share in 2010, down from 11.4 per cent in 2008, according to Dell’Oro.
The growth engine in Alcatel-Lucent’s enterprise business is its Gensys contact center software business, which accounts for 75 per cent of the company’s enterprise revenue, according to the Reuters story.