The Lucent connection

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The inability of business spending to respond quickly to easier money was shown this week as Lucent Technologies Inc. (LU.N), the former king of the telecommunications equipment market, revisited the emergency room and took $7 billion to $9 billion in new restructuring charges. It also mailed out another 15,000 to 20,000 layoff notices, in addition to the 19,000 cuts early this year. Lucent's head count will total less than half the 155,000 employees it had just a year ago.

Lucent, which is in talks with banks to avoid debt default, has been crushed by its customers' massive cutbacks on telecom gears as businesses sit out the economic slowdown.

Northern Light

Lewis Tree Service v. Lucent Technologies, S.D.N.Y. - Lewis and others have complained that they purchased or leased AT&T Merlin Legend telephone systems between 1994 and 1996 that were not Y2K compliant and were later told that they would have to pay to ensure compliance.  The Federal Judge dismissed the action against Lucent finding that the plaintiffs failed to meet the heightened pleading requirement under federal Y2K Act.  Plaintiffs were given limited leave to file a third amended complaint.  Plaintiffs will have to take care in specifically pleading manifestations of material defects as required by the Act.  The bad faith allegations were also dismissed.

Other info on the Federation site:

Summary of Claim: Class actions against Lucent alleging that various telecommunications products are not Y2K compliant and that plaintiffs have been or will in the future be forced to purchase upgrades or alternative products.

Causes of Action: Unfair trade practices, breach of express and implied warranties of merchantability, breach of contract.  The Community Health Complaint adds a count sounding in strict liability for product defects.

Status: Pending; however, a motion to dismiss has been filed in the Beatie action asserting that the plaintiffs have not suffered any actionable injury

The Federation

-- Anonymous, July 28, 2001

Answers

I believe that there are probably countless y2k lawsuits that are being dismissed, such as this one, due to lack of time and money of the plaintiffs, and unlimited time and money of the defendants, which is all it takes to win in a "court of law."

-- Anonymous, July 28, 2001

MURRAY HILL, N.J. — The lights are still on at Lucent Technologies headquarters, but it’s only one fluorescent bulb per cubicle instead of the usual four these days.

The free coffee and water coolers are gone too, and so is the overtime. The once-manicured lawn on the expansive headquarters could use a trim, but there’s no money to pay the gardener.

Since last year, 19,000 employees have left the telecommunications giant, and the company announced a $3.25 billion loss and cuts of 15,000 to 20,000 more positions last week.

“I’m gone,” said Dennis Lane, an electronic device mechanic who expects to be given his pink slip this week.

An added indignity to a lost job is the declining value of Lucent stock, much of which supports employees’ retirement accounts.

Lane said he wore a shirt with a Lucent logo to a department store last Christmas and wasn’t waited on. He believes he was ignored because “they thought that I was part of their losing their money on the stock market.”

Lucent hasn’t disclosed where the latest job cuts are from, but New Jersey has more Lucent employees than any other state and has lost the most jobs so far — 4,000 of its 16,000 workers from a year ago, spokesman Bill Price said.

Illinois has lost 3,000 jobs and Massachusetts about 1,500, the company said.

In order to cut $2 billion in expenses by 2002, the company has trimmed what was once considered a necessity: the information technology budget, including new computers and laptops, has been cut by 80 percent.

Virtually all corporate travel and conference center rentals are banned, spokesman John Skalko said. Employees with both cellular telephones and pagers have been asked to give up one of them; Skalko gave up his cellular phone and uses his own.

Employees with two business phone lines at home have been asked to use just one. Office telephone numbers aren’t being changed from one office to another, to save the $40 fee.

“It’s necessary for us to make sure that every dollar we spend on expenses is a necessary dollar to spend,” Skalko said.

That means no more coffee, bottled spring water and breakfast rolls at company meetings. Employees who want to eat can use the cafeteria.

“These are tough times and we’re in a fight,” Skalko said. “It’s a tough fight.”

The effect of the cutbacks on the three affluent towns surrounding Lucent — New Providence, Summit and Berkeley Heights — is unclear. Some lunch spots report slower business.

Pamela Steiner, promotions director of the Suburban Chambers of Commerce for the three towns, expects the effect to be gradual.

“Many of the people live in our area. They’re cutting out an income,” she said. “That hurts businesses in general in that people then stop their buying.”

Courier Press

-- Anonymous, July 30, 2001


Lucent turns greens into gold

July 31, 2001

BY LINDA A. JOHNSON

TRENTON, N.J.--Amid mounting financial losses and job cuts, struggling Lucent Technologies Inc. has turned a profit on one investment: an exclusive country club in New Jersey's tony horse and fox-hunting country.

The once high-flying telecommunications equipment maker, which this year is cutting expenses to the bone and laying off tens of thousands of workers, sold its Hamilton Farm Golf Club for $51 million.

The buyer, a Towson, Md.-based real estate investment company called Townsend Capital LLC, confirmed the purchase price.

Lucent, a former AT&T spinoff based in Murray Hill, spent $40 million- plus over the past three years developing the 5,000-acre estate of the late financier James Cox Brady into the golf club.

Lucent spokesman John Skalko confirmed Monday that his company made a profit on the sale, but would not discuss details.

The country club is located near the U.S. Equestrian Team headquarters in leafy Somerset County.

Lucent management intended it to be a ritzy meeting place for a tight circle of executives from major corporations, with roughly 20 ponying up $1 million each for a corporate membership.

But as strategic missteps, smarter competition and the sliding economy pulled down Lucent sales, some investors and analysts saw the country club as a poor investment.

The board of directors last fall fired top executive Richard McGinn and brought back retired Chairman and Chief Executive Henry Schacht, who subsequently decided to sell it.

Lucent has since announced plans to eliminate as many as 39,000 jobs amid losses totaling almost $8 billion.

Shares of Lucent fell 3 cents to close at $6.98 on the New York Stock Exchange.

http://www.suntimes.com/output/business/cst-fin-lucent31.html

-- Anonymous, July 31, 2001


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