Lucent, Sun to Cooperate on Internet Products

The companies plan to package and jointly market communications networking products to corporations.
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Lucent Technologies

(LU)

and

Sun Microsystems

(SUNW) - Get Report

said Wednesday that they were taking a stab at building the infrastructure and products needed to operate electronic business more effectively on the Internet.

The companies plan to package and jointly market communications networking products to corporations.

As part of their announced alliance, Lucent, which makes telecommunications equipment, will buy up to $500 million of computer servers from Sun.

Wall Street viewed the deal favorably for Lucent, as its shares rose 2, or 3%, to 76 by midafternoon. Sun's shares slipped 11/16, or 1%, to 131 9/16. (Lucent closed up 3, or 4%, to 77 while Sun closed down 1 1/16, or 2%, to 130 3/16.)

Scott McNealy, chairman and chief executive of Sun, argued there was a critical need for the products that the two companies would provide. "In the telecommunications world, when you pick up a telephone handset, you expect to hear a dial tone -- every time,'' he said in a statement. "Mission critical business applications are increasingly dependent on having that same reliable, scalable communications networking infrastructure, as well as proven applications software. This is where the Lucent-Sun collaboration will create a significant impact."

In this attempt to "turbo charge the net economy," as Rich McGinn, Lucent's chairman and chief executive, phrased it in a conference call, the two companies will use the products and services of the other. "The critical issue here," he continued, "is the need to create an electronic business infrastructure fully capable of supporting new e-business models and to do that on an open basis."

On the infrastructure side, Lucent, based in Murray Hill, N.J., will use up to $500 million of Sun's

Netra

computer servers over the next seven years as the platform for its new wireless telephone network equipment. For its part, Sun will have its servers feature new versions of Lucent's softswitch technology and 7R/E feature servers. Additionally, the two companies will investigate the use of high-speed optical interconnects for Sun's servers.

On the product side, Lucent and Sun, based in Palo Alto, Calif., are jointly packaging communications networking systems, Internet servers and turnkey options that will ease the difficulties of doing business on the Internet or service providers and companies.

They are starting out with four products or "bundles," of which the first is an application service provider email application. It is already available. Upcoming will be bundles for a communications portal, available in the second quarter of 2000, as well as customer relationship management and policy enabled e-commerce.