In an interview with the French daily Les Echos ALU CEO Ben Verwaayen ruled out deep job cuts similar to the scale of Nokia Siemens which in November announced eliminating 17,000 positions. According to Verwaayen:

“There’s no way we are cutting our staff by 25 percent. We are in a different situation because we have quickly turned towards the network technologies of the future.”

So like any proper CEO he left himself some wiggle room: it could be anywhere between zero and 24%.

In the end of 2011 The Motley Fool happened to publish an year-end review of the stock. If you had spent $1,000 to buy ALU stocks in the beginning of 2011, by December 30 (the last trading day in the U.S.) your ALU position would only be worth $520. Or as the Fool says, 2011 was the year Alcatel-Lucent lost its mojo. The company’s revenue also declined by 1.3% in the year.

It did sell off Genesys for over a billion dollars so after that transaction completes ALU would have a bit of financial cushion. But historically ALU’s operating expenses pretty much erase what it makes in revenues. And with today’s worldwide — especially in North America and Europe — depressed economic condition, it’s harder to increase revenue but a bit easier to trim operating costs.

There’s no doubt that Verwaayen and the ALU board face tremendous pressure from shareholders going into the new year. Let’s hope the company can be turned around without having to go down the Nokia Siemens route…

Thank you from the bottom of my heart for your support and readership. InsideCTI will soon be two years old — an eternity for any (niche) blog! I’ve come to realize that a great number of you share the same passion for contact center news and customer service principles.

This is evident as the blog saw a 2x increase in visitors and pageviews year-over-year. Okay, maybe I should thank those of you who fell asleep at the keyboard reading the blog and your nose happened to repeatedly hit Reload? I’ll still count those as valid page hits!

Allow me to share some statistics (something we love in dealing with contact centers, no?):

Top 3 Browsers: Internet Explorer (39%), Firefox (26%), Chrome (24%). Google Chrome has really caught on! Interestingly, Android Browser appeared on the list this year with 0.05%.

Top 3 Operating Systems: Windows (79%), Macs (15%), and iPad (3.5%). How amazing is that? The iPad made it to the top three beating out Linux (2%). In fact, the iPad took away some iPhone numbers (0.08% in 2011, 1.6% in 2010) too!

Top 3 Mobile Operating Systems: iPad (96%), iPhone (2%), and Android (2%). The Apple iPad continue to dominate the mobile browsing experience. The sad news? BlackBerry devices registered zero hits in 2011, but actually had 3.44% in 2010.

Top Referrals: Both Facebook and Twitter refer almost equally at 15%, and LinkedIn around 8%. An year ago Twitter dominated Facebook in terms of referrals.

In terms of articles, there was a lot of interest surrounding the award-winning Groupama iPhone customer service app; then there was the drama from the Alcatel-Lucent sale of its Enterprise business (alas only Genesys was sold to Permira for $1.3 billion). Top 5 Articles:

1. Groupama iPhone app is customer self-service in the smartphone era
2. Alcatel-Lucent inches closer to selling enterprise business
3. Four simple rules for new technology evaluation (guest post)
4. New front runner in Alcatel-Lucent Enterprise sale
5. Enterprise Connect: NEC UC&C architecture targets IT managers and connected workforce (guest post)

So there you have it, a brief 2011 year in review.

What developments can we anticipate in 2012? Here are my thoughts:

• Depending on how soon Apple takes Siri out of beta and how open it makes the APIs, we may start to see the beginnings of a mobile speech-enabled customer service app. Much like the innovative Groupama app, except now with speech capabilities.
• Avaya will finally IPO, but the reception from investors will be dismal because PBXs and communications equipment are boring in the age of social-, mobile-, and location-aware products from young companies.
• Enterprise video will continue to be hyped, primarily by vendors in order to push their gears. Most workers are content with just something like Skype and Google Hangout.
• The financial uncertainty in Europe and sociopolitical unrest in countries like Egypt will impact contact center outsourcers and the BPO market. Asia and Latin America will be where these businesses flow.
• Bella Swan becomes the vampire next door.

Happy New Year and I look forward to bringing you informative and entertaining contact center content in 2012!

The Financial Times just broke the news a few hours ago that Alcatel-Lucent has agreed to sell Genesys — not all of the Enterprise division — to European private equity firm Permira. The final price? $1.5 billion.

No updates on ALU, Genesys, or Permira’s websites.

The saga finally ends (follow the drama here, here, and here)?

(h/t @DanMorehead, @McGeeSmith)

The Alcatel-Lucent Enterprise bidding saga continues…

The latest report from Bloomberg puts a damper on the whole deal:

Permira, which had been in exclusive talks to buy the enterprise unit, is now in non-exclusive talks for Genesys, the part of the unit that makes software for managing customer call centers, a person with direct knowledge of the talks said on Sept. 2. Permira is a London-based buyout fund. Alcatel-Lucent fell as much as 7.7 percent, after dropping 4.1 percent Sept. 2.

Talk about prolonging the agony.

Alcatel-Lucent wants money for selling its Enterprise business — in the neighborhood of $1 billion.

Nobody’s interested now except Permira but just the Genesys piece, which is unlikely to fetch that dollar amount for ALU.

At this point it’s all a mess. ALU isn’t getting what it hoped for and perhaps neither will Permira. Nobody is happy and everyone’s a loser… ALU shareholders are watching their equity vaporize before their eyes, ALU Enterprise folks are feeling abandoned, Genesys employees (and customers) face an uncertain future, and Permira may never prospect for a telecom deal again.

Oh, did anyone notice the rumors of Europocalypse growing louder and more depressing economic data coming from the U.S?

Last week Gartner came out with its latest Magic Quadrant for UC. So how do things look in the cutting edge field of unified communications?

Well, it appears that everyone is either a leader or niche player.

The vendors deemed worthy enough to float on the upper-right leaders quad: Microsoft, Cisco, Avaya, Alcatel-Lucent, and Siemens Enterprise Communications.

Most of the others, designated as niche players by the ever politically correct Gartner (as opposed to “non-leaders,” “losers,” or “followers”?) in the lower-left quad, include some usual suspects like ShoreTel, Interactive Intelligence, TeleWare, Toshiba, and Aastra Technologies; but there were a couple of newbies this time: Digium and Huawei Technologies.

Between quadrants challengers (NEC and IBM) and visionaries (Mitel) were only three companies. Notice that the newcomers Digium and Huawei went straight to the niche quad instead of arriving as challengers or visionaries…

And to me that is tragic. Has the UC market place finally settled and its landscape defined?

With Microsoft leading the pack it’s clear that UC is an enterprise software application. Microsoft’s dominance in enterprise software is paying dividends in the adolescent UC market. Plus, its leadership further strengthened with the acquisition of Skype.

I wouldn’t have thought networking giant Cisco to be a close second. My #2 pick would’ve been IBM but alas, Big Blue has never quite figured out “communications” throughout its history.

Interestingly, Mitel is the only visionary in the report. The company has been making waves recently by making its products VM-friendly and exclusive — a “game changer,” according to Dave Michels of Pin Drop Soup:

Today at VMworld in Las Vegas, we learned of a new capability: virtual softphones! Mitel’s US desktop suite, UC-Advanced, includes a softphone (and presence, and IM), and it is now supported on VMware’s View virtual desktop infrastructure (VDI). To my knowledge, this is the first time a softphone is truly being supported on a virtual desktop. This is a game changer.

…

So far, this is a Mitel (MCD) and VMware (View 5) exclusive. The companies have not disclosed the secret sauce that makes it work, but it will no doubt be coming to other vendors. VDI is hot! It drives down support and hardware costs while improving mobility. Allowing a softphone to tag along has huge implications, particularly for organizations embracing cloud services. Virtual desktops have the potential to turn all kinds of form factors into legitimate, secure workstations including PCs, thin client desktops, iPads, and ChromeBooks.

Thanks to Eric Krapf over at the No Jitter blog, we learn a bit about the “secret sauce“:

“In the VDI space, the reason why the math works so well is you don’t have a PC for every person in the datacenter; you oversubscribe the resource,” because you don’t have everyone using all their resources all the time, [Mitel CTO Jim Davies] explained. So “even if you solve the latency problem, which is solvable, you still have the math problem.”

Rewriting the softphone application enabled Mitel to solve the latency problem; VMWare created an API for View that lets the Mitel softphone’s media streaming function plug into the thin client on the desktop, while the remaining functions move to the datacenter.

What will the next UC Magic Quadrant look like? I hope to see more dots in the top-left and bottom-right quadrants.

The latest update on the sale of ALU Enterprise? Now there are reports that the sale may be finalized by the end of this week:

Alcatel-Lucent could finalise the sale of its enterprise business by the end of the week.

After months of closed-door negotiations with varied suitors including HP and Siemens Enterprise Communications, the company confirmed interest overnight in “exploring strategic options” for its non-telco business.

The business provided unified communications, workflow management and call centre software to large businesses internationally.

The big challenge is in negotiations with the French workers unions.

Stay tuned…

Back in April news broke that Alcatel-Lucent was hanging a FOR SALE sign on its Enterprise business which includes Genesys, the top contact center software vendor. A few weeks later it’s reported that potential buyers were in San Francisco to discuss a deal worth around $1 billion, and that Siemens Enterprise Communications (SEN) was the front runner.

Now more than two months later Reuters reports of a new “lead horse” to buy ALU Enterprise: Permira:

Private equity firm Permira has emerged as the frontrunner to buy a collection of businesses put up for sale by telecom gear maker Alcatel-Lucent (ALUA.PA), sources familiar with the situation told Reuters.

The crown jewel of the sale is Genesys, which sells software for the operation of call centres and video conferencing and is attractive for its high margins.

“Permira is the lead horse,” one source said. It is offering $1.3 billion and the process is expected to last another month.

Permira and Alcatel-Lucent declined to comment.

Permira is a private equity firm founded in Europe with approximately €20 billion. It has a very diverse portfolio, owning companies worldwide in the life sciences, entertainment, fashion, technology, financial, and media sectors. This is a firm that invests in Silicon Hills’ (aka Austin, TX) Freescale Semiconductor as well as iconic fashion group Hugo Boss and Valentino.

So naturally, it wants to get into the networking and telecom business as well…

This latest Reuters report also sheds some light about this sale which leads me to believe SEN is no longer a serious contender to acquire ALU Enterprise.

First, sources told Reuters that an SEN offer had been rejected because of its “complicated structure.” Plus, SEN’s 51 percent owner the Gores Group “tried unsuccessfully to bring more partners into the bid, including KKR” (another global PE firm). The logical reason for SEN’s approach would be either it didn’t have the $1 billion or it didn’t want to risk that much on its own. Even though Alec Gores doesn’t shy away from high stakes gambling, Gores Group-backed SEN appears to be quite conservative in terms of investing in its future.

Second, Alcatel-Lucent unionized workers in France are jittery about a deal and have already staged a strike. French labor laws are a valid concern here. Just this will discourage bidders that aren’t experienced in dealing with European labor and unions.

Third, sources said Alcatel-Lucent has hired high-profile Qatalyst Partners as advisers on the sale. Qatalyst is known for negotiating great deals for its clients that are mostly in the tech sector, some notable transactions: National Semiconductor (acquired by Texas Instruments for $6.5 billion), Atheros (Qualcomm, $3.6B), Kosmix (Walmart, undisclosed), Netezza (IBM, $1.9B), 3PAR (HP, $2.4B), Palm (HP, $1.4B), and LifeSize (Logitech, $405 million). If the choice is between SEN and an established private equity firm like Permira, it’s unlikely that Qatalyst will advise picking SEN as the buyer.

So how close is Permira? Will the price go higher than $1.3B? Or could there even be an IPO in the U.S.?

The newswires are reporting that Alcatel-Lucent is meeting potential buyers for its enterprise unit this week in San Francisco. News of the company’s intent to sell first surfaced nearly two weeks ago. Possible suitors include Avaya, Cisco, HP, and Siemens Enterprise Communications (SEN). It’s said that SEN is considered to be the front-runner in the deal.

Some industry analysts and bloggers are picking HP to win it and arguing that a buyout from SEN wouldn’t make much sense. But there are also detractors. Dave Michels from Pin Drop Soup postulates, rather succinctly:

If It is cash then Cisco wins (who wants their stock anyway), and if it is a stock deal SEN wins. If it is not cash or stock, it is an IPO.

To me spinning off the enterprise business (which includes Genesys) would make the most sense. There are definitely growth opportunities for this part of the business, especially with Genesys’ momentum in the industry. ALU can partly own and invest in the spinoff if it wishes to continue to enjoy the fruits of the enterprise division. But the spinoff process is sometimes messy and perhaps costly, and it appears that ALU is really eyeing for a cash transaction of at least $1 billion for this sale, instead of a stock transaction.

I don’t believe any publicly-traded company whose core competency isn’t in enterprise telecom would want to touch this deal, simply because Genesys is such a big part of the equation. Cisco, having recently trimmed its consumer business in order to appease shareholders, wouldn’t dare to spend a cool billion on ALU Enterprise. Cisco shareholders want to see more sales of big iron data routers and switches, and new products to fend off cheaper competing products.

A buyout from HP may seem like a match made in heaven, but I think HP has more to gain as a mistress than the bride in this situation. It already has a good partner relationship with ALU Enterprise. HP thrives on partnerships when it comes to augmenting and supplementing its enterprise portfolio, but it will make bold moves such as the Palm acquisition in acknowledgement of its tablet computing failure (the HP Slate) and corrected the course with the Palm buyout. A lot of what ALU Enterprise offers overlap with what HP can already do, except in the contact center and IP telephony areas. With 2Q2011 earnings release coming up in less than a month, I’m not so certain that HP would stir the pot and go for it.

That leaves private equity firms and/or other private investors. Both Avaya and SEN are backed up private equity money, and I wouldn’t be surprised if Silver Lake Partners or Gores Group decides to expand their portfolio with ALU Enterprise. These equity firms have a track record of understanding and not shying away from enterprise telecom companies. However, Avaya hasn’t completely mastered the aftermath from the Nortel Enterprise buyout yet. SEN, on the other hand, is desperate for some traction especially here in the U.S. It’s no wonder SEN is reportedly the front-runner in the deal.

However this deal goes down, my hope is that it isn’t rushed. There are plenty of potential buyers and options, including for ALU to do nothing.

It appears that Cisco isn’t the only one looking to go on a diet.

According to the Wall Street Journal MarketWatch:

Alcatel-Lucent (ALU6.01, -0.05, -0.83%) SA is exploring the sale of its business that sells phones and other telecommunications gear to corporations and which could be valued at $1.5 billion or more, according to people familiar with the matter.

The Franco-American company has hired advisers and during recent days began to examine options for the business, which has about $1.5 billion in annual sales. Besides a sale to a single buyer, other options include an initial public offering of stock. An Alcatel-Lucent spokesman declined to comment.

Genesys would be part of the enterprise business. Speculation on potential buyers include Microsoft, HP, Ericsson, and other private equity firms.

Previously there was also talk about ALU being sold to an undisclosed Chinese firm. So there’s definitely something going on within the company…

It’s not that its enterprise business isn’t making money, but it’s just too small in the overall picture. And like Cisco, ALU also has anxious shareholders to appease and thinks that return to its roots will help.

Shares of ALU surged more than 10% this morning on speculation of a potential bid from a Chinese company. This would be a very interesting development in the telecom sector, including in the contact center segment.

Alcatel-Lucent already does business in Asia and recently has been trying to re-invent itself into a Web-savvy telecom company. It’s often cited that the company faces stiff competition from Chinese manufacturers such as Huawei and ZTE.

From Reuters:

PARIS/FRANKFURT, March 3 (Reuters) – Shares in telecom gear maker Alcatel-Lucent (ALUA.PA) rose 11 percent on market talk of a potential bid from a Chinese company, traders said on Thursday.

Traders also cited talk of positive comment from management on a roadshow in the United States.

“(We) hear some very vague Chinese bid rumours. Also hearing management roadshowing in the U.S. and apparently they did quite a good job,” one trader said.

Several traders also mentioned a bullish note from Barclays Capital, which was also boosting Alcatel’s stock. “We continue to see Alcatel-Lucent as the best positioned of a challenged group of companies in the telecom infrastructure segment and raise our estimates again,” Barclays analysts said in the note. The analysts raised their price target for Alcatel to 3.90 euros from 2.80 euros, with an “equal weight” rating.

An Alcatel spokeswoman declined to comment on the market talk.

At 0913 GMT, the stock was up 8 .1 percent, giving the company a market value of around 9 billion euros ($12.5 billion).

Volume on the stock, which reached a 2-1/2 year high, already represented 120 percent of the stock’s 90-day average daily volume, compared with 39 percent for France’s CAC 40 .FCHI index. ($1 = 0.7202 euro)