Lucent, Philips Form Giant Phone Supplier

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Philips Electronics NV and Lucent Technologies Inc. will merge their consumer phone equipment operations, creating the world's largest supplier of phones with $2.5 billion in annual sales, the companies announced Tuesday.

Philips, a Dutch consumer electronics maker, will own 60 percent of the venture, called Philips Consumer Communications, while Lucent will own 40 percent. No cash is involved in the transaction, Lucent spokeswoman Jane Moulton said.

The venture gives Lucent, the equipment division spun off by AT&T Corp. last year, the benefit of Philips's consumer marketing experience while providing the Dutch company an entry into the U.S. market, analysts said. The new venture could also become a force in cellular phones, they said. "Consumer products was Lucent's biggest question mark," said Barry Sine, an analyst at SBC Warburg Inc. "This is a strategically brilliant move for them to combine with Philips's marketing expertise." "Philips has a lot more marketing savvy than Lucent," said Scott Vergin, a portfolio manager at Lutheran Brotherhood, which owns 317,000 Lucent shares. "The market's telling me it's a good move." The joint venture will supply analog and digital phones, answering machines, pagers and other wireless equipment to a market estimated at $20 billion and growing at 14 percent a year, the companies said. The combination could bring a change in the global wireless phone business, said Jeffrey Hines, analyst at Natwest Securities Ltd. Lucent and Philips could challenge the domination of cellular phones by Motorola Inc. …