Lucent's Growth Grope

One area Lucent is particularly keen on is IMS sales. Big telcos like SBC (SBC), Cingular and BellSouth (BLS) have recently signed on for the gear that promises to manage different types of Internet and phone system traffic simultaneously.

But some observers see IMS sort of the way it's pronounced: i-mess.

Lucent has struggled for years to find a bridge between its conventional phone gear, which has dominated networks for decades, and the Internet, which runs on an entirely different protocol and business model.

Now new gear like Lucent's IMS and Nortel's (NT) Ultra Broadband Access equipment promise to usher in an era of IPTV for telcos. But the downside is that it also opens the floodgates to low-cost and even free services, like voice and video from outfits, like Google (GOOG) and Yahoo! (YHOO), that are looking to unseat telcos.

In other words, the pace of revenue erosion in telecom could start to quicken dramatically, say analysts.

But Lucent CEO Pat Russo was optimistic about opportunity "game changer" role next-generation network gear offers. "The importance of IMS over the longer term is that it has lots of tentacles."

Investors have to hope these tentacles don't pull the Lucent ship under water.

Lucent shares were up a penny to $2.78 in midafternoon trading Friday.

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