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Communications The Almighty Buck

Lucent: Down But Not Out 72

Frisky070802 writes "Forbes has an article about the "new" Lucent. It discusses how Lucent is trying to follow in the path of IBM by transforming itself from an equipment provider to a provider of services, even to companies using equipment from competitors. Patricia Russo, the CEO, claims that Lucent has turned the corner and proven it can survive. The article quotes a few statistics on just what has survived: for instance, revenues down from $28.9B in FY2000 to an expected $8.9B in FY2004, and headcount dropping from 157K to 32.5K over that time." Lucent has fascinated me, simply because they were so well setup, but then floundered for *years*, but have a great amount of interesting technology at their core.
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Lucent: Down But Not Out

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  • Give away the equipment, earn on "Support and Services". Hasn't this worked well for all the Linux companies of the late 90s?
  • by pandrijeczko ( 588093 ) on Saturday May 08, 2004 @07:44AM (#9092537)
    Go take a look at HP's share prices recently and then you'll understand who's responsible.

    I worked for Lucent during the Fiorina years and I saw it decline from a great company to one that was brought down to its knees - sure, the dotcom bust was part of the reason but Fiorina's "dubious" business practices didn't help. Whatever anyone says, she was kicked off the Lucent board and how she ever got to HP is beyond my comprehension - well, one idea springs to mind but it involves a casting couch.

    I hope Lucent pick themselves up again - the heavy investment in 3G technology did not help their recovery - as they have the Bell Labs heritage (along with Avaya) and a more rounded workforce than IBM, albeit much smaller.

    IBM is very good with server technologies and web integration stuff but Lucent has the better telecoms and networks skills and is probably well placed to offer services in those areas.

    As for HP the sooner they kick out Fiorina, the better - I wouldn't trust that woman to run a hotdog stall, let alone a global company.

    • It is no wonder Lucent is mimicking IBM, The company that placed a mole inside their boardroom, [] and HP's, nearly destoying both, is too successful not to have some things worth immitating.
    • ...they have the Bell Labs heritage (along with Avaya) and a more rounded workforce than IBM, albeit much smaller.

      Yes to heritage, no to "more rounded workforce" unless you can substantiate that comment. I don't see that whatsoever.

    • by Anonymous Coward
      Lucent has the better telecoms and networks skills and is probably well placed to offer services in those areas.

      Only if you're talking about selling services to monopoly telecoms, which I'd concur Lucent was good at. Overpriced, highly packaged yesterday-tech like Billdats, Kenan billing, the tired and overextended 5ESS, outsourced telco installation and support services (fulfilled by green new hires who haven't even seen the product manuals until the job site) and other telco-specific products just don't
    • by arivanov ( 12034 ) on Saturday May 08, 2004 @11:43AM (#9093770) Homepage
      It is not just Fionna. It is a flock of executives. We had a head of engineering transplanted from there in one of my previous jobs. The creature f**ked up the department in less then 3 months and was one of the very few which were ever ejected from the company in those days (top of the boom). He was "retired to spend more time with his family".

      From day the transplanted lucent abomination started going around with an "outsourcing checklist" without even trying to understand the fact that we have just about enough staff to either define the requirements or write bespoke stuff to plug holes without defininig requirements (basically write as we go along). He never actually understood this. He never had any other ideas on how to do things either. Classic example of a person without any clue in software development. Believe it or not he was the head of Lucent reqional R&D before being transplanted.

      He provided me with an insight of what happened to lucent. Lucent was the first company to outsource massively its software development arond 1997. It did this as a "cost saving measure" without retaining people to define the requirements and design what the outsourcers have to do. As a result from 1st company in VOIP it promptly went off the radar screen. Same thing happened in many other areas. Basically Lucents's woes are selfinflicted and they are a classic example on how not to outsource.
    • but I'd hit it. Twice.
  • Economic cycles (Score:5, Insightful)

    by talaphid ( 702911 ) on Saturday May 08, 2004 @07:47AM (#9092542) Journal

    So... a company did really well during a boom, didn't expect the - let's go with at least a century of data - inevitable bust, and ended up in the fiscal doghouse. The bust is showing faint signs of turning into a boom, and a company lasted long enough to see the dawn. I hope I'm not abstracting a little too much for everyone's taste, but I'm just amazed at how this sort of 'news' borders on anything more than a madlib.

    OTOH, it is Lucent. I am confused by the matching corporate-think cycle regarding slimming to 'core business' and 'diversification', which has had profitable units dropped because they weren't the "core business". I realize this comes with a nice immediate fiscal gain, but... so would selling the whole company, or firing all the employees.

    Lucent, if I understood properly, was a victim of both this 'core business' nonsense along the need for capital by its parent business unit. I think of Lucent as an innovator, and it seemed set up for failure. So... yippee! Pat yourselves on the back, Lucent. I do find it mildly amusing that their future will be neither a 'core business' nor 'diversification', but rather, (minding) other people's business.

    Now if you'd like to credit me the value of shares at the price I originally paid for them...

    • So... a company did really well during a boom, didn't expect the - let's go with at least a century of data - inevitable bust

      Neither did anyone else tho...
    • Now if you'd like to credit me the value of shares at the price I originally paid for them...
      But surely the point of buying shares is investing at risk?
      Just as you can make a capital gain you can make a capital loss!
    • Having worked at an AT&T plant, which became Lucent the day after I left:
      - When AT&T divested the Baby Bells (1984), the judge told them that they had to continue to manufacture EVERYTHING that was an "active" product - even the stuff they had not made in 10-20 years (everything listed in the spec book). The RBOCs then found out that they did not have to order new equipment, just fix the old stuff, really old stuff.
      - We did not even know how much it was costing us to make - the judge said we had to
  • How good is Lucent at playing nice with the OSS community? Been so long since I saw some of their stuff out on the market. Could be one way to improve their image, like Apple and IBM improved their images a bit when they adopted free or *nix software.
  • by G4from128k ( 686170 ) on Saturday May 08, 2004 @07:55AM (#9092562)
    One of the big changes is what Jose Mejia has done to Lucent's supply chain []. The company's Customer Delivery Organization concept has helped the company connect the back-end of manufacturing and supply to the front-end sales force. This has helped the win contracts and control costs.

    I'm sure Lucent faces a tough battle given that wireline connections aren't growing, wireless is becoming a commodity, and optical still faces a glut of installed dark fiber. Still, I suspect that they will be able to reap their share of contracts and profit from whatever telecom equipment sales there are.
  • by The Analog Kid ( 565327 ) on Saturday May 08, 2004 @08:05AM (#9092581)
    What do Lucent primarily do? Make base stations or atlease the equiptment for for cell phones. I took a tour of the Whippany, NJ facility and they are also working on getting broadband in the car aswell as piping television through it. They got to about 30 fps, but seeing how there is no motion blur they need a lot more fps. However inlight of their innovation they need to find something that will give them a good chunk of change every month to continure to do innovations.

    On another note, the guy I was with said the employees have a very trusting relationship with each other and that if they left their office they can come back and fine it still there instead of being stolen, however it turns out that Lucent has the highest car jacking rate in the entire town of Whippany(or it could be Hanover Twsp which Whippany is a part of)
    • That isn't what Lucent primarily did. Their big markets were WAN equipment (Frame Relay, ATM, Sonet/SDH) as well as DSL DSLAMs and phone switches such as the 5ESS. The "equipment for cell phones" you refer to was frequently all the ATM and 5E stuff in the phone switching office.

      Lets not forget all the long haul DWDM, fiber and everything Bell Labs had their fingers in.

      Charles Hill
      ex-Lucent ACN
  • Lucent & Apple (Score:3, Informative)

    by Trurl's Machine ( 651488 ) on Saturday May 08, 2004 @08:05AM (#9092582) Journal
    I have a Lucent Cellpipe [] DSL modem and Apple Airport Base Station [] coupled together as my home wireless network router. They work together quite happily but... Airport Base Station just looks great, more like a piece of art than a wireless router. It also runs perfectly silent. Lucent Cellpipe, on the other hand, looks butt-ugly AND IT WORKS LOUD - it constantly hisses and buzzes (I even learned to guess the operating mode from the kind of noise it makes - there's a special kind of hissing when the box is connecting with the PPPoE server, a special kind of hissing when it's connected and everything is OK, a special kind of hissing when WAN goes out of synchro). Obviously, wireless network nodes do not need to look fine and they don't even need to work quiet but... both devices are also a sort of a sample of the general technical culture for both companies. And guess which company's products I'll tend to buy in the future...
    • by sjbe ( 173966 ) on Saturday May 08, 2004 @09:43AM (#9093022)
      both devices are also a sort of a sample of the general technical culture for both companies. And guess which company's products I'll tend to buy in the future...

      You do realize that Lucent makes (or made) the electronic guts for the Airport, right? Granted, Lucent may not be winning any awards for industrial design, but in a very real way these products were both made by Lucent. Not such an easy decision is it?

  • Patricia Russo, the CEO, claims that Lucent has turned the corner and proven it can survive. The article quotes a few statistics on just what has survived: for instance, revenues down from $28.9B in FY2000 to an expected $8.9B in FY2004, and headcount dropping from 157K to 32.5K over that time.

    Mass firings, revenues dropping to the point where you have to wonder if they even have a product, and an extatic CEO preaching their revival? Sounds like Lucent might still have some of that Bell Labs UNIX copyrigh
  • What? (Score:4, Informative)

    by MrPerfekt ( 414248 ) on Saturday May 08, 2004 @08:27AM (#9092660) Homepage Journal
    I don't believe people really know what Lucent does. I see one post about "Lucent should use OSS" and another post talking about their Lucent DSL modem.

    Lucent had/has their hands in alot of pots. Yeah, they do make DSL modems, but that was just so they had something to offer up when service providers bought their Stinger DSL Concentrator.

    Lucent to me was the manufacturer of hardcore ATM equipment as this really was their core business before the CBX500 became aged. Of course, this is just my experience from my job. Lucent is still so big that knowing all the divisions and sub-organizations within it is confusing at best. I'm sure the other organizations within Lucent had their own core business that was pretty successful.

    In 2000, we worked with four lines of ATM switches. Today, we still work with 3 of the 4 and nothing really new has been introduced. So pretty much, everybody that needs to buy one has probably bought one already. That's the peril of a hardware company that hasn't introduced anything new or innovative in about 5-6 years.

    The optical switches are pretty exciting (but I've never worked with it so I can't speak to the actual models) but I know they are expensive and are overkill for alot of applications so I don't believe they're flying off the shelf.

    So what have we left but to become a services company which has been another auxillary department at Lucent for many years. Perhaps you recall Lucent's acquisition of INS in the late 90s. The difference nowadays is that the services arm of Lucent is probably financially more healthy than the hardware manufacturing arms of Lucent.
    • The services arm may be in better shape but it is not the old INS. That group (called NPS internally for a while) has actually been spun back off and is now called INS again (ref I always found it odd after they laid off almost the entirety of that group that they decided to be a services company. They were actually about to cashier the tiny handful of remaining people and just close the division when they got an external investor to buy the remnants.
    • Don't they still make those firewalls they call "bricks".

      Wonder how well they worked in practice.
  • by nickovs ( 115935 ) on Saturday May 08, 2004 @08:48AM (#9092720)
    ...for instance, revenues down from $28.9B in FY2000 to an expected $8.9B in FY2004, and headcount dropping from 157K to 32.5K over that time.

    To see the glass half full for a moment, consider these numbers. The revenue per employee is up from $184K to $274K, about a 50% rise. Given the salaries and other indirect employment costs are a very large part of the overheads in a company the size of Lucent, and that Lucent lost many of those employees by selling off divisions rather than through lay-offs, this seems like a sign of fairly good management.
    • by Anonymous Coward
      > this seems like a sign of fairly good management.

      Short-sighted analysis. They accomplished the increase in revenue/employee by cutting their development staff to the point that they can no longer sustain development in key areas.

      In short, they are toast. Carrier's aren't going to hire Lucent to tell them how to integrate Juniper and Cisco gear in their network. And if Lucent plans on going after the enterprise market (who actually do need services support), they are going head-to-head against IBM
    • To see the glass half full for a moment

      The glass is actually less than empty in Lucent's case. Consider these key stats []. Particularly near the bottom where it says "Book value per share" and notice that this number is negative. This means that if the company closed the doors and sold off all of its assets (factories, accounts receivable, existing inventories, patent rights, etc) it would still owe. This is a Bad Thing. Furthermore, free cash flow is also negative, to the tune of 680 million. This n
    • How about firing everyone and you can get infinitely large revenue per employee for a moment.
  • Get a logo that people can take seriously for starters.
  • Being that I work in several different CO's, I'm fairly familiar with Lucent Equipment (from DDM2000 multiplexers up to the 5E) and Lucent, service provider. If they've changed concentrations, they've failed to show it in the area in which I work...they've recently stopped doing vendor work in the state and, a while back, stopped giving tech support except on their newest equipment like their DMX.
  • Wow, it seems like only yesterday they were up from 33K to 56K.
  • What will happen to Plan 9? The commercial rights belong to Vita Nuova, but I think Lucent/Bell Labs retains the copyrights and such...
  • Farewell Xanadu! (Score:4, Interesting)

    by dankney ( 631226 ) on Saturday May 08, 2004 @09:47AM (#9093047) Homepage
    Waxing nostalgic ...

    It will be a very, very sad day when Bell labs moves away from technology research and starts researching customer service tools and metrics. Or stops researching all together.

    Bells labs is also the birth place of a lot of digital audio technology. Max Matthews was there -- the father of electronic music. It's where speech synthesis was invented. Remember HAL singing "A Bicycle Built for Two?" They actually synth'ed a computer doing that back in the 60's.

    It's the beginning of the end for one one the cultural icons of technology.

    Although, if they're in the service industry now, maybe they'll eventually become a geek theme park. Imagine riding the digital rollercoaster, where you're either at the top or bottom, but never anywhere in between ..

  • Lucent (and its relatives) have been in decline for decades. It was never the technology, but the ability to turn the technology into viable products. I worked there for years. Every good idea in the past 25 years had been developed by someone there and abandoned, leaving the market to Sun, Cisco and a host of other agressive startups. A lot of great talent was wasted there.
    • Your song is known as "The Xerox Blues". :)
    • Re:Lucent (Score:2, Interesting)

      by nrc ( 112633 )

      You've hit the nail on the head, but failure to adapt great technology into good products was just a symptom of a larger problem.

      All of the Ma Bell spin-offs suffered from a corporate culter born and bred in a monopoly. In that environment you can afford developing technology that never turns into a viable product. As long as you're meeting the needs of your business and the equipment lasts 20 years, it's all good.

      But beyond failing to transform technology into product, the challenge for the Ma Bell spi
  • Want some real fun? Try being a newbie on the last surviving UNIX helpdesk for a huge corporation while its cutting 2/3+ of its staff and equipment. Suddenly you inherit responsibility for thousands of workstations and servers you've never touched in all their years, you have no idea how they've been administered, just that they're now your responsibility now (responsibility but not control - you're not allowed to change anything).

    Now just for added fun, have someone start going through the server room

    • responsibility but not control - you're not allowed to change anything

      On the other side of Telecom Island, Team MCI/Worldcom also worked under this odious rule. Programmers were told to fix a 20-year-old codebase, but they were forbidden to change anything.

      For instance, new functionality had to be implemented without new functions! Adding a new function was too much of a change. So we had 5000-line functions with all kinds of junk in them.

      Data abstraction was also frowned upon, so those 5000-line

  • I wasted three years of my life at Lusuck, where I watched employees who gave the best years of their life to that company get the boot to the street. I watched my entire set of peers get systematically fired for completely bogus reasons. I watched those who were still lucky enough to keep a job secretly sabatoge one another, stealing each others work, bad mouthing everyone to get ahead. I watched management continuously increase their salaries while all of this took place.

    The s.d. area I worked in was

  • I work at LU (Score:1, Interesting)

    by Anonymous Coward
    ...because there's not much else in the area. I do not recommend it.

    They've fired most of the people that work for a living. There's way too much management left.

    Check this article [] about our execs salaries and performance relative to those of companies like Cisco.

    It will never come back without swapping out all of the upper management and that will never happen.

  • When AT&T decided to split up, they did a capabilities survey of their employees. The top rated third would stay with AT&T, the middle rated third would go to Lucent, and the bottom rated third would go to NCR.

    However, this was not told to those making the survey. Politics being what it was at AT&T, the politicians and powerful managers got the highest rating and stayed with AT&T, the technicians went to Lucent, and NCR got the leftovers. (There is an interesting sociology thesis somewhere

Scientists are people who build the Brooklyn Bridge and then buy it. -- William Buckley