Mixed News From Lucent’s Overseas Operations

Reinforcing its multi-vendor support strategy, Lucent’s
services arm announced a multi-year, multi-million-dollar contract with
Deutsche Telekom’s systems division today.

The Murray Hill, N.J., firm will maintain T-Systems’ Internet Protocol-based
virtual private network and Multiprotocol Label Switching

Lucent will also remotely monitor, repair and exchange components of the IP
network worldwide as well as provide technical troubleshooting and software
updates for the Bonn, Germany, company.

The pact is significant because it involves support of rival’s components.
Previously, Lucent only maintained systems built on its own gear, a
practice that restricted the number of jobs they could compete for.

“Over the last 18 months we’ve made a considerable shift toward multi-vendor
networks,” Lucent spokesman Stephen Loudermilk told

Today, more than 30 percent of Lucent’s customer deployments and 20 percent
of its services revenue come from multi-vendor business. In addition,
Lucent’s multi-vendor networking experience spans more than 120 vendors and
470 different products.

Compared to network equipment orders, which are one-shot deals, the services
business provides stable, predictable revenues, something Lucent welcomes
after the telecom boom and bust cycle of the last few years.

In less positive news from Lucent’s overseas business, the company has found
“incidents and internal control deficiencies” in its China operations that
could involve violations of the Foreign Corrupt Practices Act. The FCPA
prohibits bribery of foreign officials to win work.

Lucent has fired four people in its China group including the president,
COO, a marketing executive and a finance manager, according to a filing with
the Securities and Exchange Commission yesterday. It did not give details on
the alleged violations.

Lucent does not expect the incident to materially impact its financial
results. It cautioned, however, that it can’t say what impact it may have on
its future operations in China, which it considers ripe for
telecom equipment and services.

Lucent China has eight regional offices, two Bell Labs branches, four R&D
facilities and a number of joint ventures and wholly owned enterprises.
Currently, the company has approximately 3,000 employees in China and
manufactures a range of network equipment for use there as well as around
the world.

Previously, the company reported similar potential problems in its Saudi
Arabia offices. A U.S. government investigation is still ongoing in that

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