Alcatel Unloads DSL-Modem Business

Noting that the business of retail sales is best left to companies that are
equipped to handle the task, Alcatel Alsthom has inked a memorandum of
understanding to transfer its digital-subscriber-line modem activity to Thomson
Multimedia, a vendor that also carries a line of cable modems.

According to the MOU, Thomson will buy Alcatel's DSL-modem business in
exchange for 9.5 million new shares of Thomson stock. At an average share price
of 48 euros per share, the deal is valued at approximately 456 million euros
($387.9 million), the companies said. The deal is expected to close before the
end of the year.

Alcatel -- which will continue to make and sell DSL-network-infrastructure
equipment and DSL components -- said the DSL-modem sector is expected to evolve
into a consumer industrial and commercial business model, an area in which
Thomson holds more expertise.

Thomson's absorption of Alcatel's DSL-modem business could spark a
consolidation of other players in the sector as unit prices and margins continue
to drop. A similar consolidation is expected to occur among the dozens of
cable-modem makers that have emerged since the development of the interoperable
Data Over Cable Service Interface Specification.

Alcatel sold 1.7 million DSL modems last year to network operators such as
BellSouth Corp. and SBC Communications Inc., and it held a 22 percent share of
that market by the end of 2000, the company said, citing The Dell'Oro Group