NEWS BRIEFS
Trenton, N.J. — Lucent Technologies, trying to rebound after strategic missteps and production problems hammered its stock price and forced warnings of disappointing earnings, announced plans to reorganize its optical networking group.
The Murray Hill-based provider of telecommunications equipment and services said it will split the business into separate units focusing on long-distance and metropolitan fiber optic networks. The networks carry digitized voice, Internet and data traffic at high speeds on multiple wavelengths, or channels, of light.
The restructuring, meant to boost optical network revenues more quickly, comes after three straight disappointing quarters.
“By focusing on the core and metro markets, we expect to see more rapid growth across our entire optical networking business and realize a greater convergence with our data networking business,” said Richard McGinn, chairman and chief executive officer.
Lucent shares have lost nearly half their value since trading at $84 in December, including a 16 percent plunge to $54.125 July 20, when company executives warned that profits for the next two quarters will be well below analysts’ expectations.
Lucent stock closed at Thursday down 4 percent, or $1.938, to $43.125 on the New York Stock Exchange.
Two executives who joined Lucent recently when it acquired their startup firms will head the new units in what one analyst says is a move to install “younger, more entrepreneurial managers to run the business.”
“The company wants to make sure that what they’re doing is in tune with the marketplace,” said telecommunications analyst Dave Heger of A.G. Edwards & Sons in St. Louis. “With some of the missteps they’ve had in the optical business … Lucent’s playing catch-up.”
Heger said he expected Lucent to reap more long-term benefits than immediate ones from the management changes, which were timed to coincide with the retirement of Harry Bosco, the optical networking group’s president.
Bob Barron will head Lucent’s new metropolitan optical networking unit, which will supply products that transmit voice and data along fiber optic cables to businesses and residential customers in metropolitan areas. Barron, 43, joined Lucent in June when it acquired two-year-old Chromatis Networks of Herndon, Va., where he was chief executive officer.
Meanwhile, Jeong Kim will oversee Lucent’s core optical networking unit, which supplies the same type of products to long-distance carriers such as AT&T for handling data and other traffic between cities. He will stress developing integrated long-distance networks that combine the newest technology in fiber optics and data routing. Kim, 39, joined Lucent in May 1998 when it acquired Yurie Systems of Landover, Md., which makes ATM access technology and equipment for data, voice and video networking.
When Lucent acquired Chromatis, industry experts said it would help Lucent improve its competitive position against its two primary rivals in optical networking, Nortel Networks and Cisco Systems.
“Our goal is to leverage the entrepreneurial and technical talents we’ve gained through acquisitions to drive more speed into our development and delivery processes,” McGinn said Thursday.
Lucent, which was spun off from AT&T in 1996 and has since acquired dozens of startups and other technology businesses, had one of the hottest stocks on Wall Street when its shares were first issued. But the stock has gone into a nosedive amid a series of problems, from insufficient production of some hot new products last fall to losing customers to competitors such as Nortel that rolled out higher-capacity fiber optic equipment long before Lucent.
The company also has seen customers switch sooner than expected to newer products with lower profit margins than the ones they replaced.
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