BellSouth Buys Put Lucent, Cisco in Sweet Spot

Lucent (LU Quote) and Cisco (CSCO Quote) are taking the cake in the latest telecom industry supplier bake-off.

Atlanta telco BellSouth (BLS Quote) chose the companies to supply optical equipment for an upgrade of its local phone network. Terms of the arrangements weren't disclosed, but Monday's deals mark significant wins for the two big networking gearmakers in a tough industry spending environment.

The bigger winner is Lucent, which continues to fight its way back from the steep decline of recent years. The BellSouth pact marks the second major win for the New Jersey company's new-generation synchronous optical networking, or SONET, systems. In late 2001, Lucent staked a big claim to Verizon's (VZ Quote) future network expansion business.

For Cisco, which is healthy but always scanning the horizon for new growth prospects, the victory is more symbolic. In that regard, the deal is a "huge win" for Cisco, which until now had failed to secure a major ongoing contract with any of the nation's four Baby Bells, says optical analyst Sam Greenholtz of Telecom Pragmatics. ...