Thursday, May 31, 2001
Lucent's government work might snag foreign merger
By Jim Krane
The Associated Press
NEW YORK From anti-submarine warfare technology to software that secures super-secret computers, Lucent Technologies Inc. has long provided federal agencies with vital tools.
As a result, Lucent would have faced a tough national security review with divestiture of its government contract division likely had its merger talks with French-owned Alcatel not collapsed, analysts say.
For now, the breakup of talks with Alcatel apparently over management issues settles the matter. But with Lucent still open to merger possibilities, the troubled corporation's military and intelligence technology could provide a stumbling block for any prospective foreign partner.
In the AT&T breakup, Lucent retained Bell Labs, a research and development incubator renowned for attracting brilliant minds and responsible for four patents a day last year, or 28,000 since 1925.
The laboratory holds blueprints to a mother lode of government technology. Experts doubt that the laboratory's brain trust and archives would have been permitted to be used by France, which is both an ally and an industrial rival.
Bell Labs has worked with every major (U.S.) government institution at one time or another, said Lisa Pierce, a telecommunications researcher for the Giga Information Group in Cambridge, Mass. I doubt it would have survived intact.
The merger would have required approval of the Committee on Foreign Investment in the U.S. (CFIUS), which represents 11 federal agencies including the departments of Defense and State and the president's national security adviser.
Short of blocking the deal, CFIUS might have withheld approval until Lucent divested itself of its government contracting business, or erected a firewall that would have prevented classified activities from being transferred to the French component.
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