By Julian Goldsmith, 13 January 1999 17:32
NEWS Telecoms equipment giant Lucent has bought data networking company, Ascend Communications. The $20bn deal highlights the growing trend for wealthy telecoms hardware manufacturers to buy up smaller datacoms firms in anticipation of a convergence of the two markets. At the announcement of the merger, Lucent CEO Rich McGinn paid lip service to the direction communications markets are apparently taking. "Clearly the opportunities [for convergence] are out there now. Multiservice networks are out there now," he said. "There will be 1000 new service providers worldwide over the next year." The deal is expected to wipe out Lucent's profits for 1999. McGinn confirmed that Ascend CEO Mory Ejabat will be retained throughout the transitioning process, but the new Lucent division formed from the fusion of the acquisition with Lucent's data networking organisations would be headed by Jim Stanzione. Insiders at Ascend are pleased with the acquisition, which they hope will position it as a contender for Cisco's spot as the largest data networking hardware vendor. "Cisco has to start wondering how much time it has got left at the top," said an Ascend spokesman. "This deal puts in the position as leader of the pack."
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