Alcatel-Lucent Considers Sale of Telecom-Gear Unit

Alcatel-Lucent is exploring the sale of its business unit that sells phones and other telecom gear to corporations, which could be worth $1.5 billion or more, people familiar with the matter tell The Wall Street Journal.

The Franco-American company has hired advisers and in recent days began to examine options for the business, which has about $1.5 billion in annual sales. Besides a sale to a single buyer, other options include an initial public offering. The range of possible buyers for the business could include tech companies like Microsoft Corp. or Hewlett-Packard Co., or other telecom-gear makers like Ericsson and private-equity firms. Valuations of the business vary, but one person said it’s worth well over $1 billion and possibly more than $2 billion.

Besides office telephones, Alcatel-Lucent’s enterprise business sells switches and other networking gear, plus hardware and software used in the call centers. The business is growing and profitable, one person said, but it accounts for less than 10% of the company’s annual revenue, which last year was $21.5 billion.