Attribution: "Alcatel Lucent booth" by Ayustety is licensed under CC BY-SA 2.0

Lucent Technologies, Inc. was a multinational telecommunications firm based in the United States. It manufactured semiconductors, PBX, and networking equipment. In its time, the firm grew quite successful, attracting the attention of such prominent firms as Alcatel. Lucent.com was the firm’s official website.  

If Lucent was successful, the company also didn’t shy away from controversy. It became well known for several scandals, including an accounting scandal where its growth seemed to be powered by lending money to customers with the aim of growing sales.

Today, any attempts to find Lucent.com shows that the website is no longer online. What could have happened to the firm that once said it was “a $21 billion start-up company with 127 years of leadership and experience in the communications industry”?

This article attempts to answer the above question by following Lucent’s history and some of its controversies.

The History of Lucent.com

Lucent.com was established in 1996. The company was formed following a divesture of AT&T Corporation’s former business unit called AT&T Technology. A divesture is a process where a business exists from some parts of the market by disinvesting or selling off subsidiary investments or interests.

According to the company that connects entrepreneurs with different sources of capital, FundingUniverse.com, “Lucent would begin business with more than $20 billion in annual revenues and a workforce of 137,000 employees.”

Lucent’s IPO offering in 1996 netted what the New York Times called a “Record $3.025 Billion.”    

Behind the Name Lucent

Attribution: "AT&T Central Office" by MrBill is licensed under CC BY 2.0

When Lucent was established, the management at AT&T Corporation was precise about one thing: the new company could not use the Bell and AT&T brands. This meant that it had to find a name quickly. It settled for Lucent.

The company’s symbol was an abstract red ring, and its tagline was “We make the things that make communications work.”   

But what was the reasoning behind the name Lucent? Corporate Brand Matrix, a company that specializes in corporate branding, has the answer. It says that “The name ‘Lucent,’ an evocative real word meaning light-bearing, and the abstract ‘red ring of innovation’ symbol met [the company’s] strategic and emotional goals in dramatic fashion.”     

Acquisitions by the Dozen

Lucent’s strategy seems to have been hinged on acquisitions. Richard McGinn took over the reins at Lucent in October 1997, following the resignation of the company's first CEO, Henry Schacht. Company-Histories.com reports that when McGinn took over, he “began a series of acquisitions and mergers that continued through 2000.”

According to Company-Histories.com, “Through early 2000, Lucent spent $32 billion in stock and cash to acquire or merge with 30 companies.” The same source notes that McGinn also disposed of some of Lucent’s businesses so that the company’s semiconductor business could focus on digital signal processors and not commodity chips.

One of the companies acquired by Lucent was Nexabit Networks, a terabit router start-up based in Marlborough, Massachusetts. The acquisition’s price tag was reported to be around $900 million.

Other companies acquired by Lucent, as identified by Company-Histories.com, include Octel Communications Corporation (electronic messaging, voice, and fax technologies), Prominet (Gigabit Ethernet networking), and SDX (business communication systems), among others.

The Scandals

Lucent may have been a perfect example of a successful business, but the same could not be said regarding its ethics. This is a view supported by some scandals the company is linked to.  

Lending Money to Customers

Scott Woolley writes for Fortune.com and tells how Lucent tried to drive sales by lending money to its customers. Woolley says, “A tiny start-up called PathNet agreed to buy huge amounts of fiber-optic gear from Lucent, a deal worth at least $440 million and potentially as much as $2.1 billion.”

While the reported deal benefited Lucent, leading to a 3% jump in the company’s share price, Woolley notes that the challenge was in understanding “how a tiny company like PathNet, with barely 100 employees and all of $1.6 million in annual revenue, could swing such a massive purchase.”  

We have the answer now: Lucent had loaned money to PathNet. In an article about the scandal, Woolley wrote: “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.”

Employees Fined

In 2005, two former employees of Lucent were fined by the U.S. District Court for the District of New Jersey. The fines were $25,000 and $40,000.

Stephen Taub, reporting for CFO.com, says that the former employees’ misconduct was that “To seal a software deal, the individuals agreed to a credit and discount but kept Lucent’s senior finance management in the dark.”  

The Lucent and Alcatel Merger

In 2006 Lucent and Alcatel merged, creating a company called Alcatel-Lucent. In a press release, published on April 2, 2006, the merged company called the union a “merger of equals” and gave an idea of what was to follow:

● The merged firm was financially stronger, with revenues expected to be $25 billion based on the calendar 2005 results.

● New growth opportunities would be created, with annual pre-tax synergies of around $1.7 billion within the three years following 2006.

● The merger would create a global leader with the most comprehensive wireless, wireline, and service portfolio in the industry.

● The two companies would create a giant in communications research and development.

● Alcatel and Lucent would have equal representation on the board of directors.

Nokia Acquires Alcatel-Lucent

In November 2016, Nokia announced that it had finalized its acquisition of Alcatel-Lucent.

Agence France-Presse reports about the deal and speculates that “The acquisition will allow Nokia to expand from telecoms networks to Internet networks and cloud services to better compete with its global rivals, the Swedish group Ericsson and Huawei of China.”

What Then Happened to Lucent.com?

When Lucent and Alcatel merged, Lucent.com started redirecting to Alcatel-Lucent.com. Alcatel-Lucent.com would later start redirecting to Networks.Nokia.com following the acquisition of Alcatel-Lucent by Nokia. That redirect broke sometime in 2018.