Lucent Buys Riverstone Assets

Lucent technologies is buying assets of Riverstone Networks , which makes carrier Ethernet routers for $170 million in cash. The deal is a signal that the carrier interest in Ethernet is on an upswing, and as more demands are put on the infrastructure, this market could see a sharp increase.

Lucent will acquire substantially all of Riverstone’s business operations, not including its cash and convertible subordinated notes, for $170 million in cash.

Credit Suisse First Boston analyst Paul Silverstein told his clients that he doesn’t believe that the deal “offers the prospect of significant potential reward.” Why? Because Cisco is so dominant, and at best he expects Riverstone to contribute $50-to-$100 million in sales to Lucent every year. Riverstone’s future has been under a cloud, and the company is being investigated by the SEC though a settlement might be around the corner.