Lucent Wins Verizon Gear Deal

Coddling the big cats is paying off for Lucent (LU Quote).

The telecom gearmaker has won a three-year contract to supply Verizon (VZ Quote) with metro optical phone network gear, say people familiar with the deal. The deal is valued in the neighborhood of $1 billion or more, these same people say, and marks a substantial victory during a period of falling network spending by big telcos like Verizon.

The win comes at a critical time for Lucent, which is in the midst of a death-defying turnaround. Rivals, particularly Tellabs (TLAB Quote), are bound to be stung. Tellabs was widely thought to be the front-runner for this next-generation dense wave division multiplex, or DWDM, deal. An endorsement from Verizon, the nation's biggest local phone company, could have catapulted Tellabs ahead just as phone companies are shopping for new gear to accommodate heavier traffic.

Lucent had no comment, and a person close to the company said no announcement was imminent. Verizon declined to comment.

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