Psst: Want to Buy a Phone Vendor?

Rumors are flying that Alcatel-Lucent may be looking to sell some assets, including its Enterprise division. The company reported decent sales, but its EBIT was sharply lower than expected. Alcatel-Lucent will potentially need more asset sales or some other means of improving its balance sheet.

The Enterprise division offers UC, PBX, and networking gear. In it's Q312 report, it showed a decrease in revenue of 13.8 percent compared to last year with overall weakness in voice and data. However, the firm is seeing traction in markets where it sells voice and data together.

The firm recently announced a big win with the California State University (CSU) system, which will displace a lot of Cisco switches. Cisco's bid was $100 million higher, so ALU-E gear will be installed in all CSU campuses except for CSU San Jose which chose to award the business to Cisco without obtaining competitive bids. The win may be recorded as winning the battle.

Reuters reports that ALU is "mulling" sale of its submarine and enterprise units. "Alcatel-Lucent said on Friday it was studying options, including asset sales and a restructuring of its debt, to strengthen its balance sheet after posting a third-quarter loss." ALU sold off its most lucrative UC asset, Genesys, to private equity group Permira last year for $1.5 billion. The company initially tried to bundle all of its enterprise unit into that sale.

Reuters lists possible bidders as Mitel and Siemens Enterprise Communications. ALU-E does have some attractive assets and patents. I like the idea of Avaya buying Alcatel-Lucent, primarily because the Avaya buildings in Denver are on Lucent Blvd. Unfortunately, finding a buyer among current competitors may prove difficult as none can be described as flush with cash. Plus, few of the major competitors have holes their portfolio's that ALU could fill. It could turn into a reverse auction of sorts.

Also on the topic:

• A-L-Who?
• Alcatel-Lucent to Consider Asset Sales as Losses Mount