Lucent sells a consulting firm

investmenttool.com technology journal

Last week Lucent Technologies inked a deal to sell its consulting arm to International Network Services. The new firm, which is actually an old one that Lucent bought a few years ago will focus on Enterprise customers.

The deal was a good one for Lucent, netting it some cash with which it can reduce debt. It was also a sign of past failures. Sources inside the company indicate that Lucent got between 2%-5% of what they paid for the firm several years ago.

The story goes like this. Lucent buys a company that had done business with a lot of large firms, including Cisco and Northern Telecom. The idea was to leverage the company to provide value using Lucent technology.

The problem was the consulting firm itself found its largest customers didn't want to deal with it. Why is Cisco going to continue doing business with a company that is suddenly the enemy?

A lot of business was lost, people lost their jobs and Lucent realized a year or so ago that the transaction was ill conceived. The bottom line is that someone at Lucent didn't think really hard before they made this transaction. Perhaps that explains why Lucent is currently trading for $1.36 a share.

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Shmuel Protter
investmenttool.com

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