Friday, March 24, 2006

Lucent is finally being sold Apparently
for $12.6 billion dollars.

The NYTimes article mentions that when AT&T spun off Lucent in 1996 it was a $3 billion IPO. Were there a series of subsequent offerings* in the last 10 years or do people only talk about the “collapse” of Lucent because it was once valued higher than AT&T?

10 years: $3 billion to $12.6 billion. That`s a 15.5% average annual return (not accounting for any splits). Doesn`t sound like a collapse to me. Sounds like a publicly traded company that was overvalued in 2000, but performed solidly for 10 years. Maybe some of you Lucent shareholders or market afficianados can fill me in on where I went wrong with this line of thinking?

*Even accounting for a second hypothetical $3 billion offering in 1997, we still see annual returns on market cap of more than 8 percent!


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