Lucent Technologies Inc. may settle for less than the agreed-upon US$2.75 billion price tag for its optical fiber unit in order to close the deal, according to a report in The Wall Street Journal on Thursday.
Lucent has been trying to sell its fiber division since the beginning of the year. In July, it agreed to sell the unit to Japanese telecommunication cable maker Furukawa Electric Co. Ltd., U.S. broadband coaxial cable manufacturer CommScope Inc. and Corning Inc., as part of its efforts to raise some much needed cash.
Now the parties are again in talks and may knock about 10 percent off the originally agreed price, though the sale itself is not in danger of falling apart, the report said, citing sources close to the negotiations.
Lucent, Furukawa, CommScope and Corning could not immediately be reached for comment.
Based in Norcross, Georgia, Lucent's optical fiber solutions unit, which employs about 6,000 people, is second only to Corning in the production of fiber-optic cable. When it was first reported in February that the unit was for sale, media reports estimated that the troubled telecommunication equipment provider could raise between $4 billion and $8 billion for the division.
The sale of its fiber unit is a key part of Lucent's attempt to restructure the company. The Optical Fiber Solutions unit was the only robust unit in the Murray Hill, New Jersey-based company's report for the quarter ending Dec. 31, 2000, in which Lucent posted a $1.02 billion loss, confirmed it was to lay off 10,000 employees and announced intentions to restructure the company.
But as with the rest of the telecommunication and IT market this year, Furukawa, CommScope and Corning have been facing financial difficulties of their own. Corning, for example, has been laying off thousands of employees and in October announced it too was facing restructuring after reporting its third-quarter sales were $1.5 billion, down 21 percent from last year's third-quarter sales of $1.9 billion.
Under the original terms of the deal, Furukawa was to buy the majority of the fiber unit from Lucent for $2.525 billion, with Corning paying $225 million for Lucent's fiber business in China. CommScope would then invest $600 million to $700 million to form two joint ventures with Furukawa, in effect taking equal ownership of Furukawa's freshly purchased fiber unit.