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France Fumbles

Published 09/03/08 Dustin Ensinger and Alexia Cameron - Print Article
E-mail - editor@economyincisis.org

Two years after merging, France-based Alcatel and former United States-based Lucent, still have yet to deliver the benefits the French merger promised, or more importantly to reap any profits, according to MarketWatch.

Prior to merging with Alcatel, Lucent was a New Jersey-based company composed of what was formerly AT&T Technologies. In September 1996, Alcatel acquired Lucent for $11.6 billion, and Lucent surrendered 800 American Bell Lab patents to France.

Since the merge, the company has witnessed six consecutive quarters of losses, cut 16,500 jobs and lost nearly $7 billion. In order to remedy the situation, Alcatel-Lucent has brought in Ben Verwaayen, former head of the BT Group - The U.K.'s largest phone company- to replace Patrick F. Russo as chief executive. However, the company’s track record of issuing repeated profit warnings and declining share prices (60 percent in the last two years), probably won’t draw in any new investors. Alcatel-Lucent reported a $1.7 billion quarterly loss in July alone and more layoffs appear to be on the horizon, despite claims by Verwaaven that there won’t be any immediate offings.

As American companies continue to be sold off to foreign interests, we are losing our county’s identity daily. Lucent’s merge with Alcatel accounted for the loss of thousands of American jobs and hundreds of patents. Our weak dollar has allowed foreign interests to snatch up our corporations at liquidation prices, forcing us to watch in horror as some American staples flounder under new ownership and disgrace their American roots.

Source MarketWatch:

Investors, whose patience has been sorely tested by the slow pace of the integration, repeated profit warnings and a 60% share-price decline, will likely have little patience for any early fumbling from its new management team.

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