Editing Lucent Technologies (section)

==History==
One of the primary reasons [[AT&T Corporation]] chose to spin off its equipment manufacturing business was to permit it to profit from sales to competing [[telecommunications]] providers; these customers had previously shown reluctance to purchase from a direct competitor.  [[Bell Labs]] brought prestige to the new company, as well as the revenue from thousands of patents.

At the time of its spinoff, Lucent was placed under the leadership of [[Henry Schacht]], who was brought in to oversee its transition from an arm of AT&T into an independent corporation. [[Richard McGinn]], who was serving as president and COO, succeeded Schacht as CEO in 1997 while Schacht remained chairman of the board.  Lucent became a "darling" stock of the investment community in the late 1990s, and its split-adjusted spinoff price of $7.56/share rose to a high of $84. Its market capitalization reached a high of $258 billion, and it was at the time the most widely held company with 5.3 million shareholders.<ref name="autogenerated2003">{{cite web |last=Loomis |first=Carol J. |date=July 7, 2003 |title=The Whistleblower And The CEO In the Lucent scandal, the ex-boss will walk. The woman who accused him is now an SEC target. And guess who's paying the penalty? Owners like you |url=https://money.cnn.com/magazines/fortune/fortune_archive/2003/07/07/345538/ |archive-url=https://web.archive.org/web/20131220041042/http://money.cnn.com/magazines/fortune/fortune_archive/2003/07/07/345538/ |archive-date=December 20, 2013 |website=Fortune magazine |publisher=CNN Money}}</ref>

In 1995, [[Carly Fiorina]] led corporate operations.<ref name="BioTVCarlyFiorina">{{cite news |title=Carly Fiorina Biography Business Leader (1954–) |url=http://www.biography.com/people/carly-fiorina-9542210#synopsis |url-status=dead |archive-url=https://web.archive.org/web/20150427030757/http://www.biography.com/people/carly-fiorina-9542210#synopsis |archive-date=April 27, 2015 |access-date=August 21, 2015 |work=[[FYI (American TV channel)|bio.]] |location=[[Newark, New Jersey|Newark]], [[New Jersey]]}}</ref> In that capacity, she reported to Lucent chief executive [[Henry B. Schacht]].<ref>{{cite press release |title=Systems and technology company headquarters, top execs announced |date=November 20, 1995}}</ref> She played a key role in planning and implementing the 1996 [[initial public offering]] of a successful stock and company launch strategy.<ref name="BurrowsBlBuswk08021999">{{cite news |last1=Burrows |first1=Peter |last2=Elstrom |first2=Peter |date=August 2, 1999 |title=HP's Carly Fiorina: The Boss |url=http://www.businessweek.com/1999/99_31/b3640001.htm |url-status=dead |archive-url=https://web.archive.org/web/19991013034137/http://businessweek.com/1999/99_31/b3640001.htm |archive-date=October 13, 1999 |access-date=August 14, 2015 |newspaper=Bloomberg Businessweek |location=New York |quote=Fiorina managed the highly successful spin-off of Lucent in 1996.}}</ref><ref name="ReferenceA">{{cite press release |title=Fiorina to Head Consumer Products Business for Lucent Technologies |work=EETimes |date=October 15, 1996 |access-date=2015-08-07 |url=http://www.eetimes.com/document.asp?doc_id=1209221}}</ref><ref>{{cite press release |title=AT&T announces board members, SEC filing for new company |date=February 5, 1996}}</ref>  Under her guidance, the spin-off raised {{USD}}3 billion.<ref name="BioTVCarlyFiorina" /><ref name="PSellersFortune10121998">{{cite news |last1=Sellers |first1=Patricia |last2=Daniels |first2=Cora |date=October 12, 1998 |title=The 50 Most Powerful Women In American Business In an age of celebrity, it may surprise you that our No. 1 woman is someone you've never heard of. |url=https://money.cnn.com/magazines/fortune/fortune_archive/1998/10/12/249284/index.htm |access-date=August 21, 2015 |newspaper=Fortune |location=New York}}</ref>

Later in 1996, Fiorina was appointed president of Lucent's consumer products sector, reporting to president and chief operating officer Rich McGinn.<ref name="ReferenceA" /> In 1997, she was named group president for Lucent's {{USD}}19 billion global service-provider business, overseeing marketing and sales for the company's largest customer segment.<ref name="BurrowsBlBuswk08021999" /><ref>{{cite press release |title=Lucent Technologies appoints chief operating officers, organizes business around fastest growth opportunities |date=October 23, 1997}}</ref> That year, Fiorina chaired a {{USD}}2.5 billion joint venture between Lucent's consumer communications and [[Royal Philips Electronics]], under the name [[Philips Consumer Communications]] (PCC).<ref name="kaput">{{cite web |date=November 30, 1999 |title=Philip-Lucent Venture Kaput |url=http://www.rcrwireless.com/19981026/archived-articles/philips-lucent-venture-kaput |access-date=22 August 2015 |publisher=RCR Wireless News}}</ref><ref name="pcc1997">{{Cite press release |title=Philips And Lucent Complete PCC Joint Venture |work=prnewswire |date=1997-10-01 |access-date=2015-08-07 |url=http://www.prnewswire.com/news-releases/philips-and-lucent-complete-pcc-joint-venture-77344047.html |archive-url=https://web.archive.org/web/20150919182655/http://www.prnewswire.com/news-releases/philips-and-lucent-complete-pcc-joint-venture-77344047.html |archive-date=2015-09-19 |url-status=dead}}</ref> The focus of the venture was to bring both companies to the top three in technology, distribution, and brand recognition.<ref name="DuBois1998">{{Cite web |last1=Bois |first1=Martin Du |last2=Mehta |first2=Stephanie N. |last3=Naik |first3=Gautam |date=1998-10-16 |title=Philips, Lucent Prepare to End Their Struggling Joint Venture |url=https://www.wsj.com/articles/SB908493133328885000 |access-date=2015-08-07 |work=Wall Street Journal |quote=...expected to lose about $500 million this year on sales of $2.5 billion ... has a scant 2% of world-wide market share for cellular phones.}}</ref>

Ultimately, the project struggled, and dissolved a year later after it garnered only 2% market share in mobile phones.  Losses were at $500 million on sales of $2.5 billion.<ref name="DuBois1998" /> As a result of the failed joint venture, Philips announced the closure of one-quarter of the company's 230 factories worldwide,<ref>{{cite web |title=A Sahekn CEO at Phillips |url=http://www.businessweek.com/1998/48/b3606023.htm |url-status=dead |archive-url=https://web.archive.org/web/19991103143104/http://www.businessweek.com/1998/48/b3606023.htm |archive-date=November 3, 1999 |access-date=22 August 2015}}</ref> and Lucent closed down its wireless handset portion of the venture.<ref name="kaput" /> Analysts suggested that the joint venture's failure was due to a combination of technology and management problems.<ref name="kaput" /> Upon the end of the joint venture, PCC sent 5,000 employees back to Philips, many of which were laid off, and 8,400 employees back to Lucent.<ref name="kaput" />

Under Fiorina, the company added 22,000 jobs and revenues seemed to grow from {{USD}}19 billion to {{USD}}38 billion.<ref name="Fortune.Lucent">{{cite web |title=Carly Fiorina's troubling telecom past |url=http://fortune.com/2010/10/15/carly-fiorinas-troubling-telecom-past/ |access-date=19 August 2015 |publisher=Fortune}}</ref><ref name="BioTVCarlyFiorina" /> However, the real cause of Lucent spurring sales under Fiorina was by lending money to their own customers. According to ''Fortune'' magazine, "In a neat bit of accounting magic, money from the loans began to appear on Lucent's income statement as new revenue while the dicey debt got stashed on its balance sheet as an allegedly solid asset".<ref name="Fortune.Lucent" /> Lucent's stock price grew 10-fold.<ref name="Fortune.Lucent" />

In 1997, Lucent acquired [[Milpitas, California|Milpitas]]-based [[voicemail]] market leader<ref>{{Cite news |last=Schiesel |first=Seth |date=18 July 1997 |title=Lucent Is Set To Buy Leader In Voice Mail |url=https://www.nytimes.com/1997/07/18/business/lucent-is-set-to-buy-leader-in-voice-mail.html}}</ref> [[Octel Communications Corporation]] for $1.8 billion,<ref>{{Cite news |author=WIRED Staff |title=Lucent to Buy Octel Communications |url=https://www.wired.com/1997/07/lucent-to-buy-octel-communications/ |access-date=2024-02-26 |work=Wired |language=en-US |issn=1059-1028}}</ref><ref>{{Cite news |last=Weber |first=Thomas E. |title=Lucent to Acquire Octel In $1.8 Billion Cash Deal |url=https://www.wsj.com/articles/SB869145173355821500 |access-date=2024-02-26 |work=[[The Wall Street Journal]] |language=en-US}}</ref> a move which immediately rendered the Business Systems Group profitable. The same year, Lucent acquired [[Livingston Enterprises Inc.]] for $650 million in stock. Livingston was known most for the creation of the [[RADIUS]] protocol and their PortMaster product that was used widely by [[Dial-up Internet access|dial-up internet]] service providers.<ref>{{cite web |last=Hipps |first=Jay |date=December 15, 1997 |title=Lucent Acquires Livingston Enterprises |url=http://www.hacienda.org/ho-network/ho-nw-1997-12-lucent-acquires-livingston |access-date=2 June 2023 |website=Hacienda Online}}</ref><ref>{{cite news|first=Stephanie N.|last=Mehta|url=https://www.wsj.com/articles/SB876932862488061000|title=Lucent Agrees to Acquire Livingston for $650 Million|newspaper=Wall Street Journal|date=17 October 1997}}</ref><ref>{{cite web|url=http://www.interlinknetworks.com/app_notes/History%20of%20RADIUS.pdf|title=The Beginnings and History of RADIUS|publisher=Interlink Networks|first=John |last=Vollbrecht|year=2006|access-date=2009-04-15}}</ref> In 1999, Lucent acquired [[Ascend Communications]], an [[Alameda, California]]–based manufacturer of communications equipment for US$20 billion.<ref>{{Cite web |title=Lucent, Ascend in $20 billion merger |url=https://www.cnet.com/tech/mobile/lucent-ascend-in-20-billion-merger/ |access-date=2024-02-26 |website=CNET |language=en}}</ref><ref>{{Cite web |last=Holson |first=Laura M. |date=13 January 1999 |title=Lucent Is Expected to Acquire Ascend for About $20 Billion |url=https://www.nytimes.com/1999/01/13/business/lucent-is-expected-to-acquire-ascend-for-about-20-billion.html |access-date=26 February 2024 |website=The New York Times}}</ref> Lucent held discussions to acquire [[Juniper Networks]] but decided instead to buy Nexabit Networks.<ref>{{cite news|last=Schiesel|first=Seth|date=June 18, 1999|title=Lucent Is Near an Agreement To Acquire Nexabit Networks|url=https://www.nytimes.com/1999/06/18/business/lucent-is-near-an-agreement-to-acquire-nexabit-networks.html|access-date=April 28, 2024|work=[[The New York Times]]|archive-url=https://web.archive.org/web/20150527103233/https://www.nytimes.com/1999/06/18/business/lucent-is-near-an-agreement-to-acquire-nexabit-networks.html|archive-date=May 27, 2015|url-status=live}}</ref><ref>{{cite magazine|url=https://www.wired.com/1999/06/lucent-to-buy-nexabit/|title=Lucent to Buy Nexabit|magazine=WIRED|access-date=2024-04-28|language=en-US|archive-url=https://web.archive.org/web/20180211185936/https://www.wired.com/1999/06/lucent-to-buy-nexabit/|archive-date=February 11, 2018|url-status=live}}</ref>

At the start of 2000, Lucent's "private bubble" burst, while competitors like [[Nortel Networks]] and [[Alcatel]] were still going strong; it would be many months before the rest of the [[Dot-com bubble|telecom industry bubble]] collapsed. Previously Lucent had 14 straight quarters where it exceeded analysts' expectations, leading to high expectations for the 15th quarter, ending Dec. 31, 1999. On January 6, 2000, Lucent made the first of a string of announcements that it had missed its quarterly estimates, as CEO Rich McGinn grimly announced that Lucent had run into special problems during that quarter—including disruptions in its optical networking business—and reported flat revenues and a big drop in profits. That caused the stock to plunge by 28%, shaving $64 billion off of the company's market capitalization. When it was later revealed that it had used dubious accounting and sales practices to generate some of its earlier quarterly numbers, Lucent fell from grace. It was said that "Rich McGinn couldn't accept Lucent's fall from its early triumphs." He described himself once as imposing "audacious" goals on his managers, believing the stretch for performance would produce dream results. Henry Schacht defended the corporate culture that McGinn created and noted that McGinn did not sell any Lucent shares while serving as CEO.<ref>{{cite web|url=http://www.fiercetelecom.com/special-reports/rich-mcginn-lucent |title=Rich McGinn, Lucent |publisher=FierceTelecom.com |date=2012-11-29 |access-date=2015-03-29}}</ref><ref name="autogenerated2003"/>  In June 2000, Lucent announced it would acquire Chromartis, an Israeli maker of optical network equipment, for $4.5 billion<ref>{{cite news|url=https://www.wsj.com/amp/articles/SB959774423432738481 |title=Lucent Agrees to Buy Chromatis, Will Forge Alliance with IBM |newspaper=Wall Street Journal |date=June 2000 }}</ref><ref>{{cite web|url=https://money.cnn.com/2000/05/31/deals/lucent/ |title=Lucent buys Chromatis for $4.5 billion - May 31, 2000 }}</ref> In November 2000, the company disclosed to the [[Securities and Exchange Commission]] that it had a $125 million accounting error for the third quarter of 2000, and by December 2000 it reported it had overstated its revenues for its latest quarter by nearly $700 million. Although no wrongdoing was found on his part, McGinn was forced to resign as CEO and he was replaced by Schacht on an interim basis. Subsequently, its CFO, Deborah Hopkins, left the company in May 2001 with Lucent's stock at $9.06 whereas at the time she was hired it was at $46.82.<ref>{{cite web |url=http://www.cfo.com/article.cfm/3007654/c_5434995/?f=archives |title=Hopkins to Join Citigroup |publisher=Cfo.com |access-date=2015-03-29 |archive-date=May 26, 2013 |archive-url=https://web.archive.org/web/20130526193221/http://www.cfo.com/article.cfm/3007654/c_5434995/?f=archives |url-status=dead }}</ref> In August 2001, Lucent shut down Chromartis.<ref>{{Cite web |last=Scheer |first=Steven |date=2001-08-29 |title=Lucent Shuts Down Chromatis Networks |url=https://www.latimes.com/archives/la-xpm-2001-aug-29-fi-39523-story.html |access-date=2023-06-02 |website=Los Angeles Times |language=en-US}}</ref>

In 2000, Lucent received the [[Shingo Prize]] for Excellence in Manufacturing at the [[Mount Olive, New Jersey]] Product Realization Center.<ref>{{cite web |title=Lucent Technologies, Product Realization Center – United States – Shingo Prize for Excellence in Manufacturing – 2000 |url=https://www.bpir.com/award-winner-report/lucent-technologies-product-realization-center-united-states-shingo-prize-for-excellence-in-manufacturing-2000/ |website=www.bpir.com |publisher=Best Practice |access-date=4 January 2024}}</ref>

In 2001 there were merger discussions between Lucent and [[Alcatel]], which would have seen Lucent acquired at its current market price without a premium; the newly combined entity would have been headquartered in Murray Hill. However, these negotiations collapsed when Schacht insisted on an equal 7–7 split of the merged company's board of directors, while Alcatel chief executive officer [[Serge Tchuruk]] wanted 8 of the 14 board seats for Alcatel due to it being in a stronger position. The failure of the merger talks caused Lucent's share price to collapse, and by October 2002 the stock price had bottomed at 55 cents per share.<ref name=autogenerated1>{{cite web|url=http://mpra.ub.uni-muenchen.de/22012/1/Lazonick-March_Lucent_FINAL_20100410.pdf |title=MPRA : The rise and demise of Lucent Technologies |publisher=Mpra.ub.uni-muenchen.de |access-date=2015-03-29}}</ref>

In April 2000, Lucent sold its Consumer Products unit to [[VTech]]. In October 2000, Lucent spun off its Business Systems arm into [[Avaya]], Inc., and in June 2002, it spun off its microelectronics division into [[Agere Systems]]. The spinoffs of enterprise networking and wireless, the industry's key growth businesses from 2003 onward, meant that Lucent no longer had the capacity to serve this market.<ref name="autogenerated1" />

[[Patricia Russo]], formerly Lucent's EVP of the Corporate Office who then left for [[Kodak|Eastman Kodak]] to serve as COO, was named permanent chairman and CEO of Lucent in 2002, succeeding Schacht who remained on the board of directors.<ref>{{cite web |title=Lucent replaces CEO, cuts outlook |url=http://news.cnet.com/2100-1033-247418.html |access-date=2009-12-30 |publisher=CNET News}}</ref>

Lucent was reduced to 30,500 employees, down from about 165,000 employees at its zenith. The layoffs of so many experienced employees meant that the company was in a weakened position and unable to re-establish itself when the market recovered in 2003.<ref name=autogenerated1 />  By early 2003, Lucent's market value was $15.6 billion (which includes $6.8 billion of current value for two companies that Lucent had recently spun off, Avaya and Agere Systems), making the shares worth around $2.13, a far cry from its dotcom bubble peak of around $84, when Lucent was worth $258 billion.<ref name="autogenerated2003"/>

Lucent continued to be active in the areas of [[telephone switching]], optical, data and wireless networking.

In 2004, the [[U.S. Securities and Exchange Commission|SEC]] charged Lucent with a $25 million fine for the company's lack of cooperation in their fraud case.<ref>{{Cite news |last=Belson |first=Ken |date=18 May 2004 |title=TECHNOLOGY; Lucent Fined $25 Million By S.E.C. In Fraud Case |url=https://www.nytimes.com/2004/05/18/business/technology-lucent-fined-25-million-by-sec-in-fraud-case.html |access-date=26 February 2024 |work=[[The New York Times]]}}</ref>

On April 2, 2006, Lucent announced a merger agreement with Alcatel, which was 1.5 times the size of Lucent.<ref name = merger/> [[Serge Tchuruk]] became non-executive chairman, and Russo served as CEO of the newly merged company, Alcatel-Lucent, until they were both forced to resign at the end of 2008. The merger failed to produce the expected synergies, and there were significant write-downs of Lucent's assets that Alcatel purchased.<ref>{{cite news
 |url=https://www.bloomberg.com/apps/news?pid=newsarchive&refer=home&sid=ayvOTUuhSGg8 |work=Bloomberg |title=Alcatel-Lucent's Russo, Tchuruk to Quit; Loss Widens (Update4) |date=July 29, 2008 }}</ref>