Alcatel-Lucent (ALU) is planning to sell its enterprise segment consisting of switches and communication gear. This is the second time in the span of three years that the company is trying to sell its enterprise unit. In 2011, the company tried to sell its enterprise unit but succeeded in selling call center unit, Genesys, for $1.5 billion. The reason the company wasn't able to sell its enterprise unit was the heavy cost requirement to restructure the unit, as it involves the labor union and associated pension obligations. Apart from pension obligations, the company's service offerings under the enterprise unit are outdated. Alcatel-Lucent's competitors, such as RingCentral and 8x8, provide an upgraded version of cloud based phone services. The company is planning to divest around $1.36 billion worth of assets and dispose non-core assets in order to increase its investment in IP networking. It plans to increase its investment in IP networking and ultra-broadband services to 85% of its total R&D investment by 2015. By 2017 data traffic on metropolitan access and aggregation networks may increase to 75% from the current 57%. The growth in data traffic provides Alcatel-Lucent with a great opportunity. Alcatel-Lucent recently entered into a partnershipwith Qualcomm (QCOM) to develop small cells for ultra-broadband wireless access.
In the third quarter, revenue from IP routing, terrestrial optics, and ultra-broadband access solutions increased 7% to $777.95 million. I expect the revenue from IP networking and ultra-broadband will increase in 2014 due to growing data traffic.
Expanding 4G network
Alcatel-Lucent is also looking to expand its reach in the 4G LTE network. The company signed a deal with YooMee in November to deploy an end-to-end TDD LTE solution including wireless backhaul and evolved packet
source: seelinglfa.com
