And Now For Something Smaller: Cisco and Alcatel-Lucent

With all the M&A these days, bigger always seems to be the goal.  But in the past few days, the news for two of the biggest equipment giants has been moving in the other direction.  On Tuesday Cisco Systems (NASDAQ:CSCO, news, filings) said that it will exit parts of the consumer electronics business, and that would include the Flip video business.  The Umi will be moved into the business telepresence section, an odd place for a consumer product perhaps but it signals they’re not giving up on it yet.  Cisco has been coming to terms with the fact that isn’t a kid anymore, and has started to re-evaluate its path – even issuing its first ever dividend.

And today, Alcatel-Lucent (NYSE:ALU, news, filings) is reported to be considering the sale of its enterprise telecom equipment, which sells the phones and related gear used by enterprises and corporations to run their systems.  It has annual sales of $1.5B (less than 10% of the full company) and is said to be worth a similar amount or perhaps more.  Another alternative is to IPO the division.  Precisely why isn’t mentioned in the reports, but obviously it would raise cash while simplifying their path forward.

Bigger is more diverse and with greater market power, but it’s also less focused.  Everyone wants to be big, but feel like a startup.  Old, yet young.  Not so with telcos like AT&T and Verizon though, or even Level 3 and Global Crossing.

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Categories: Financials · Telecom Equipment