Alcatel-Lucent Weighs Sale of Patents to Increase Cash

Alcatel-Lucent SA (ALU), the French phone- equipment maker considering asset sales to bolster its finances, is weighing a disposal of some secondary patents as the company seeks ways out of a streak of quarterly losses and a shrinking cash pile, its chief financial officer said.

“We can look to monetize that portfolio through licensing, through limited sales if those patents aren’t part of our core and a few other things,” Paul Tufano said yesterday in an interview at a conference organized by Morgan Stanley in Barcelona. “We look at all of the above.”

Alcatel-Lucent, based in Paris, has almost 30,000 patents and 15,000 patent applications pending, Tufano said.

“It’s a broad variety of technologies that we cover,” he said. “It will be hard to find a company with as broad a patent portfolio as ours, so I think it’s very attractive and there’s a lot of interest and there could be a lot of interest from a lot of different sources.”

Chief Executive Officer Ben Verwaayen, in his fifth year in the job, is struggling to turn Alcatel-Lucent around as European phone companies spend less and Asian rivals add pressure. The more than 2 billion euros ($2.6 billion) of debt due over the next three years is hampering the former BT Group Plc (BT/A) CEO’s turnaround efforts as thousands of job cuts have failed to stem losses.

Shares Gain

The shares added 0.8 percent to 84 cents at 9:06 a.m. in Paris. They have plummeted about 80 percent since Verwaayen took over in September 2008. The 60-year-old hasn’t reached his goal of making Alcatel-Lucent sustainably profitable, and this month reported a third-quarter loss of 146 million euros.

Verwaayen’s efforts to shore up cash flow included a licensing agreement announced in February, which the company expects will deliver several hundred million euros. Alcatel- Lucent hasn’t disclosed revenue from the contract.

The CEO had so far said that the company would not look to sell its patents, which include voice-recognition and video- conferencing technology.

Last quarter, Alcatel-Lucent consumed 360 million euros of cash. Its cash reserve has diminished by an average of 700 million euros a year since Verwaayen took over from former chiefs Patricia Russo and Serge Tchuruk, who oversaw the merger of Alcatel SA and Lucent Technologies Inc. in 2006.

To contact the reporters on this story: Manuel Baigorri in Barcelona at mbaigorri@bloomberg.net; Marie Mawad in Montpellier, France at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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