Tag Archives: Lucent

Review of “Optical Illusions: Lucent and the Crash of Telecom” by Lisa Endlich

Recently I finished Optical Illusions: Lucent and the Crash of Telecom. Optical Illusions is the first book that I read on the Kindle app on iPad, and it was a very pleasant reading experience. It also was a good reading experience, forming a sort of triptych on the history of Bells Labs (along with Crystal Fire and Inside the Crown Jewel. Lucent, for those too young to remember, was perhaps best known for its logo, the coffee cup stain of quality.

The first thing to realize is that Lucent Technologies was built on a lie. The original tag line was “Bell Labs innovations,” the original advertising emphasized continuity with Bells Labs, but Lucent was not Bell Labs – it was a renamed Western Electric, a ‘thick necked,’ unimaginative legacy equipment manufacturer. The company line, that Bells Labs was too expensive to maintain, was nonsense — Bell Labs was a tiny fraction of the company’s overall expenses, and Lucent lost factors of 100s more on bad acquisitions than they did on Bell Labs.

Rather, the mission of Lucent’s leadership was to turn Lucent into any other kind of company than what it was. The leadership was aware that Lucent’s core business was a dead end, and they had no interest in using growth-oriented parts of the company (such as Lucent Microelectronics or Bell Labs) to develop new products over time. Lucent printed bubble-value stock in an effort to buy other, profitable, companies, in the hope it could use money the market was giving it for free in an effort to become a viable company.

It failed. The company, which increased its value ten-fold by the peak of speculation, eventually lost 99% of its top value. The CEO was fired, and lives and research careers were crushed. America lost a top line research organization, Lucent shareholders lost their savings, and the bubble burst.

Lucent is no longer an American company. Alcatel-Lucent it now owned by the French. The Telecom bubble has not. And because Lucent did not have a friend in Tim Geithner, it lost almost all its money.

The end.