Alcatel-Lucent in talks to sell off enterprise business unit

Alcatel-Lucent has confirmed that it is looking to offload its enterprise division, which sells network equipment and unified communications tools, in an effort to streamline its core business and focus on more profitable avenues.

The firm said in a statement that it is in discussions over a possible sell-off, but declined to name any potential buyers.

"All options are being explored including discussions with third parties. In conjunction with this ongoing review, and in application of local legal requirements, Alcatel-Lucent is holding meetings with employee representatives of its enterprise business," it said.

"No decision has been made on the options being explored and there is no certainty that this review will result in any change to the Alcatel-Lucent enterprise business."

Steven Hilton, principal analyst at Analysys Mason, suggested that the decision to sell makes sense as the unit is not generating huge revenues.

"The Alcatel-Lucent enterprise unit is underperforming and frankly it's tertiary to Alcatel-Lucent to begin with. There's no need to keep something that isn't your core business, especially when your core business isn't exactly setting sales records," he said.

"They should have sold the division two years ago and I'm sure they would have had markets been stronger."

The division's failure to generate significant growth was down to a lack of investment and an inability to compete outside its core markets, according to Hilton.

"They've underinvested in R&D and aren't leading the industry in next-generation technology solutions. Enterprise is an after-thought for Alcatel," he added.

"Alcatel had this current enterprise business and has strong market share in select European countries. But Alcatel-Lucent was never successful in growing the enterprise business outside those European countries."

Hilton pointed to a number of potential buyers for the division, but maintained that it is more likely to be taken private in the same way as the Avaya division.

"Possible technology vendor buyers include Siemens to consolidate European market share, or Huawei to help jump-start its European sales efforts," he said.