Alcatel-Lucent: Qualcomm's investment may serve as template for others

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Qualcomm's purchase of a small stake in infrastructure vendor Alcatel-Lucent to help develop small cells for 3G, LTE and Wi-Fi networks will hopefully serve as a template for others. In an interview with the Wall Street Journal, Alcatel-Lucent CEO Michel Combs said that he hopes to attract other technology investors to boost the company's research budget.

Alcatel Lucent CEO Michel Combes

Combes

According to Combes, Qualcomm's investment is small, less than 5 percent and he hopes to attract three to five additional partners that will collectively own just over 5 percent of the company.  "If you want to be more impactful in terms of innovation, we need to co-invest with the best in class, because it is difficult to invest on your own," Combes said.

The combined research investment between Alcatel-Lucent and Qualcomm will be more than €100 million ($133 million), Comes said on Tuesday, but the companies did not say how much each would contribute.

Qualcomm's investment was announced in conjunction with the company's second quarter earnings, Alcatel-Lucent reported a wider net loss of €880 million up from a loss of around €252.8 million in the year-ago period.  The company blamed the increase in losses on restructuring charges. The loss includes a €549.9 million impairment charge related to the reorganization of its wireless business and a €193 million restructuring charge.

In June Combes unveiled a new restructuring of the company's business focus and balance sheet, intent on reversing seven years of losses at the vendor. The company's "Shift Plan" calls for the firm to focus on several core areas such as IP networking. In addition, in the wireless area, it will put more emphasis on LTE and small cells and move away from investing in legacy technologies.

Combes is trying  revamp Alcatel-Lucent in the wake of cost-cutting and restructuring  efforts by his predecessor Ben Verwaayen that analysts and investors say did produce enough of a turnaround. The company has been unable to post regular profits and generate cash since it was formed in a merger in 2006, and several attempts have been made to cut costs and return the company to profitability.

For more:
- see this WSJ article (sub. req.)
- see this FierceWireless article

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