Alcatel / Lucent Merger: Implications For Wireless Business (ALA, LU)

Pat Russo, Mike Quigley and Frank D'Amelio commented in yesterday's call on the implications of the Lucent (NYSE: LU)/Alcatel (NYSE: ALA) merger for the new company's wireless business:

Sandeep Malhotra - Merrill Lynch

I wanted some clarification on the combined company’s position in 3G UMTS. Could you please comment separately on the strength that Lucent and Alcatel bring to the table, and also talk about how the two platforms will be rationalized into one platform going forward?

Patricia Russo - CEO of Lucent/Alcatel (currently CEO Lucent Technologies Inc.)

A couple of comments. First of all, as you all know the third generation technology platform is a spread spectrum technology. Lucent is the global leader in CDMA which is the same technology base, if you will, as 3G.

So we, Lucent, start from a place of tremendous depth and breadth around 3G technologies in general, and we have worked to leverage that with respect to technology deployment and platform deployment around UMTS or wideband CDMA.

We have announced two agreements publicly, one being 02 in the U.K. and as well, a very large contract with Cingular here in the United States for their UMTS deployment. I will let Mike comment on the positioning that Alcatel currently has, and then we will come back and let Frank and Mike comment on the work the teams have done with respect to how we see this going forward.

Michael Quigley - COO of Lucent/Alcatel (currently President and COO, Alcatel)

Well if I could perhaps start off by saying that one of the clear advantages, if you think about it, of the two companies coming together is just the magnitude of the strength we bring in the R&D. We really have now huge scalability in our R&D investment, and so we have big capacity to pump R&D into this.

Just complementing what Pat has said, on the Alcatel side, we have a very strong 2G footprint which complements what we see with Lucent, obviously, in CDMA. Let’s not forget also, as we move toward UMTS wideband CDMA, the expertise that Lucent’s technology brings in to CDMA can be a big asset.

We’ve got a lot of assets we’ve talked about as well in terms of software-defined radios, we’ve got I think over 50 networks which are 3G ready today in Alcatel. So when you add the two capacities of the two companies together, I think it is quite formidable.

Frank D’Amelio - Senior EVP of Lucent/Alcatel (currently Lucent COO)

The only thing I would add, Pat and Mike really covered most of it, just two comments here. One is the combined embedded base, from both a CDMA and GSN perspective, coupled with the progress we’ve been making in the UMTS really creates just a huge embedded base and ongoing opportunity for the company.

Most importantly, we will make sure we do the things we need to do to continue to satisfy and delight our customers in this area and the other areas that we do business in.