Lucent Acquisition to Expand Services

In its 28th acquisition in 18 months, Lucent Technologies Inc. last week agreed to pay US$3.7 billion for International Network Services in Sunnyvale, California.

Lucent's NetCare services have focused on operations support for multivendor data and video networks, voice systems and networks, and call centers. What INS brings to the table is a greater concentration on professional services, network integration and migration, and skills transfer. Both companies have worked extensively with service providers.

INS and its 2,200 employees will merge with NetCare's 3,300-person staff, said Jeff Akers, chief operating officer at Murray Hill, New Jersey-based Lucent's NetCare Professional Services division. INS President and CEO John Drew will head the new division.

INS customer James Barry, CIO at Insurance Holdings of America in Beverly, Massachusetts, said the merger will make his life easier. He has spent the past few months working out a contract with NetCare and INS for a voice and data convergence project.

Barry earlier this year deployed INS's VitalAgent to 1,100 desktops nationwide and is using other components of the VitalSuite network-monitoring software as well as INS's Enterprise Pro Web-based network performance management product.

He said he was confident that Lucent will fulfill Akers' promises of future product support. "I've never met an organization that could write code as tight as Lucent, and second is INS," he said.

Industry analysts have regarded INS as a ripe peach given its revenues of $315.1 million last year. "INS is a company that many people have thought about acquiring," said analyst Kitty Weldon at The Yankee Group. "But they've been viewed as being expensive because they're so successful."

The combined entity has "significant opportunities," said Mary Henry, an analyst at Goldman, Sachs & Co. Investment Research in New York. With a presence in more than 44 countries, "international growth is a large and relatively untapped opportunity," she said.

Henry said it's "intriguing" that San Jose-based Cisco Systems Inc. owns 7.8 percent of INS. The merger will "give Lucent a fair amount of information about some of Cisco's largest accounts," she said.

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