Alcatel-Lucent (NYSE: ALU) is once again going public with the future plans of its enterprise division, a move that would give it some cash to invest back into its core service provider business. Although there's been no specific price tag associated with the unit, which currently generates less than 10 percent of the vendor's revenue, people close to the talks say it could fetch about $1.5 billion.
News of Alcatel-Lucent spinning off the enterprise unit has been floating around since mid-April when a number of reports revealed that it was working with advisors on what to do with the group.
Steve Hilton, Principal Analyst for Analysys Mason believes that the sale of the enterprise unit is long overdue.
"The Alcatel-Lucent enterprise unit is underperforming and frankly it's tertiary to Alcatel-Lucent to begin with," he said. "There's no need to keep something that isn't your core business, especially when your core business isn't exactly setting sales records."
However, Alcatel-Lucent said it has not made any hard decisions on what to do with the unit yet.
"There is no certainty that this review will result in any change to the Alcatel-Lucent Enterprise business," the company said in a statement.
Hilton believes that while the unit could be attractive to either Siemens or Huawei as a way to "help jump-start the Chinese vendor's European sales efforts it's more likely Alcatel-Lucent will sell to private equity, similar to the way Avaya went private a few years ago."
- Wall Street Journal has this article (sub. req.)
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