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AFP
Paris, March 4: Telecommunications company Alcatel on Thursday announced it was buying its second internet-related business in a week and creating an internet division to "respond to the explosion of internet demand".
Alcatel said it was buying Californian company Assured Access Technology for $350 million (318 million euros), following its announcement on Tuesday that it was paying $two billion for the US data and voice network operator Xylan Corp.
The company said the two purchases, along with the acquisition of Packet Engines last year, were part of its expansion strategy into the US technology market.
Assured Access offers public data network solutions for data and voice transmission, while Xylan is a voice and data network operator."The new internet division is a key part of our drive to meet the demands of our customers in the fast-growing internet market, which offers Alcatel great opportunities," Alcatel chairman and chief executive officer Serge Tchuruk said in a statement.
"The new internetdivision is a key part of our drive to meet the demands of our customers in the fast-growing internet market, which offers Alcatel great opportunities," Tchuruk added.
The decisive move to improve its internet presence this week with the announcement of the Xylan purchase had pleased analysts, who had been saying for some time that Alcatel had been slow off the mark in moving into this fast-expanding market, particularly in the US.
Alcatel's share price rocketed upwards on the Paris stock market on Wednesday after the company had said it would soon be announcing another data network purchase, and the stock went up by more than 10 per cent before finally ending the day 7.49 per cent higher.
Investors' enthusiasm was not dampened by a reaffirmation by Standard and Poor's of Alcatel's existing credit ratings, coupled with a maintenance of a negative out look because of fierce competition, downward pressure on prices and unsatisfactory profit margins and cashflow levels.
But the ratings agency also paidtribute to Alcatel's ongoing restructuring programme and said the Xylan deal would strengthen Alcatel's position in the rapidly growing data switching equipment and enterprise data markets.This week's decisive move to beef up Alcatel's internet involvement capped a roller coaster six months following an almost 40 per cent plunge in the share price in mid-September after Tchuruk unexpectedly warned profit would not be as good as hitherto suggested.
Alcatel also faced court action from dissatisfied shareholders who were paid in Alcatel shares for their holding in US company DSC Communications shortly before the price plunge, and who argued that Alcatel was aware the stock was overvalued.
In November, the company announced a tightening up of its accounting management, and promised complete quarterly results from mid-1999, instead of half-yearly figures as previously.
At the same time, the head of Alcatel USA was named deputy director of Alcatel Telecom.
The share price has since recovered somewhat, butis still some 32 per cent below its level of six months ago.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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