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Lucent up on Nokia rumors
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December 12, 2000: 2:53 p.m. ET
Stock jumps on talks of takeover by Nokia and microelectronics unit spinoff
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NEW YORK (CNNfn) - Lucent Technologies Inc. shares soared 11 percent Tuesday, amid market rumors of a takeover attempt by Finnish equipment giant Nokia Corp. and optimism about Lucent's plan to spin off its microelectronics unit.
Shares of Lucent (LU: Research, Estimates) gained $2.13, or 12.4 percent, to $18.75 in heavy midday trading on the New York Stock Exchange. The stock has fallen 75 percent so far this year. It reached a 52-week high of $84.18 and a low of $14.31 a share.
Nokia's (NOK: Research, Estimates) American depositary receipts (ADRs) traded at $50, down 50 cents, on the New York Stock Exchange.
"There're rumors of a Nokia bid," said Wasserstein Perella Securities analyst Eric Buck.
Lucent, the world's largest telecommunications equipment maker, declined to comment on the market rumors.
Nokia, the world's largest and most profitable mobile telephone maker,
also declined to address the issue. "That's nothing we want to comment on," Nokia chief spokesman Lauri Kivinen said.
Analysts say deal is unlikely
Wasserstein Perella's Buck said he had no knowledge of whether the rumors were true, but he said the companies offer each other a good mix of products and geographic strength.
"I can't dismiss it as impossible," Buck said.
 Other analysts such as Sanford Bernstein's Paul Sagawa said such a pairing would be unlikely.
Sagawa said the odds of a deal happening are small and in his view, Nokia's management seems happy about their growth originating organically. A big acquisition such as this would bring significant risks to that strategy Sagawa said.
Lehman Brothers analyst Steve Levy also didn't see a union between Lucent and Nokia, and that it would be extremely out of character for Nokia to make such a big acquisition.
Levy also said that while the companies' synergies are interesting and make sense, a merger was unlikely to occur because, historically, tech companies don't sell when their stock is bottoming out.
Currently Levy is advising client not to touch Lucent stock for now and said that until the company files its SEC 10k, "we are flying blindly with Lucent. We don't know much about Lucent's books and neither does Nokia, most likely."
Lucent suitors may wait until re-org is complete
Lucent, based in Murray Hill, N.J., is trying to restructure its operations, cut costs and jumpstart growth after a year of disappointing earnings and product fumbles. Potential suitors may want to wait until Lucent sorts through its problems and cuts its staff, analysts said.
Wall Street expects the company to cut about 10,000 employees, or about 8 percent of its work force.
A massive acquisition of Lucent, which has a market capitalization of $64 billion, would be out of character for Nokia, analysts said.
During the last two years Nokia has made a series of small acquisitions to bolster its research and development capabilities. Nokia previously has said it aimed to expand its mobile phone division, which comprises the majority of its business, by taking market share and not by acquiring other companies.
Separately, analysts said investors were pleased that Lucent appeared to be making progress in its plan to spin off its microelectronics business.
Lucent on Monday filed a registration statement with the U.S. Securities and Exchange Commission for the initial public offering for up to 20 percent of the unit, which will be called Agere. The IPO is expected by the end of the first quarter of 2001, and a full spinoff should be completed by summer. Agere makes semiconductors and optical components for communications systems.
"Investors believe we're getting some meat around of bones of the spinoff. There are some who believe that the spinoff is worth almost as much as the whole stock is trading at right now," said James Stone, an analyst with Stifel Nicolaus & Co.
--from staff and wire reports 
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