Lucent buys Octel to attack messaging market

Lucent Technologies has bought Octel Communications for $1.8 billion in cash, or $31 a share, in a move which is expected to catapult the company into a leading supplier of messaging solutions.

Job cuts are expected at Octel "in general and administrative positions," according to Lucent, which added that it will take a one-time, non-cash charge against its fourth quarter earnings that will cut fiscal 1997 earnings.

Lucent reported strong third quarter earnings this week and said that Octel will add to overall revenue. Octel is a leading voice, fax and electronic messaging company and Lucent said the acquisition will give its messaging unit revenue of more than $1 billion in an industry growing at more than 20 per cent a year. The total messaging market is worth more than $5 billion annually, and is expected to double to $10 billion by 2000.

"With this move, we will address the growing global demand for the technologies that support products like voice mail for wireless service providers and telephone companies, and networked messaging systems for large corporations,'' said Rich McGinn, president of Lucent.

Robert Cohn, founder and CEO of Octel, in Milpitas, Calif., will become president of Lucent's messaging unit.