The Rise and Demise of Lucent Technologies
The Rise and Demise of Lucent Technologies William Lazonick and Edward March In 1999, as the Internet boom was approaching its apex, Lucent Technologies was the world’s largest telecommunications equip- ment company. With revenues of $38.3 billion, net income of $4.8 billion, and 153,000 employees for the fiscal year ending Septem- ber 30, 1999, Lucent was larger and more profitable than Nortel, Alcatel, and Ericsson, its three major global competitors. In fiscal 2006, however, Lucent’s revenues were only $8.8 billion and its employment level stood at 29,800. Both figures were lower than those of its three major rivals. On December 1, 2006, the merger that created Alcatel-Lucent took place, making Lucent a wholly owned subsidiary of Alcatel. In this paper, we analyze the rise and demise of Lucent Technologies from the time that it was spun off from AT&T in April 1996 to its 2006 merger with Alcatel. Our analysis of the case of Lucent shows the ways in which strategy, The original version of this paper was presented to the conference on Innovation and Competition in the Global Communications Technology Industry, INSEAD, August 23-24, 2007. The paper is part of a project, emanating from that conference, engaged in a comparative, updatable analysis of business models and economic performance among the major competitors in the communications technology industry. For other studies generated by this project, see www.theAIRnet.org. In the later stages, funding was provided by FINNOV project through Theme 8 of the Seventh Framework Programme of the European Commission (Socio-Economic Sciences and Humanities), under the topic “The role of finance for growth, employment and competitiveness in Europe” (SSH- 2007-1.2-03), as well as by the Ford Foundation project on “Financial institutions for innovation and development” and the Institute for New Economic Thinking project on “The stock market and innovative enterprise.” We are grateful to Yue Zhang for research assistance.
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