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Lucent's Plan for Spinoffs Propels Stock 15% Higher

March 02, 2000|(Bloomberg News)

Lucent Technologies Inc., the No. 1 phone-equipment maker, on Wednesday said it will spin off slower growing businesses to focus on fiber-optic and Internet equipment, sending its shares up 15%. Lucent stock rocketed $8.94 to close at $68.44 on volume of 77 million shares, making it the most active New York Stock Exchange issue Wednesday. The Murray Hill, N.J.-based company is shedding units that sell and set up corporate phone and data systems and make wire cabling for office networks, markets whose sales are rising about 8% a year. The businesses, many holdovers from Lucent's days as part of AT&T Corp., generated $8 billion in fiscal 1999 sales, compared with $30 billion for the rest of Lucent. "These businesses [being spun off] have been something of a drag on overall Lucent results," said Sanford Bernstein & Co. analyst Paul Sagawa. The spinoff frees Lucent to concentrate on making communications and Internet equipment for big phone companies, where it competes with Cisco Systems Inc., the No. 1 maker of computer networking equipment, and Nortel Networks Corp. The company will complete the spinoff, which will be tax free to shareholders, by Sept. 30.

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