GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Alcatel-Lucent Can Deliver Results in the Long Run

August 17, 2014 | About:



Alcatel-Lucent (ALU) is in a turnaround mode. The company has done well to improve its performance in recent times by cutting down the losses and selling off non-core assets. Moreover, it is diversifying outside the service provider space by catering to new customers that include cable operators and large-scale enterprises such as web-scale players and adjacent segments.

Alcatel-Lucent registered first wins in the cable segments for IP routing and Fixed Access as well and began expanding its reach into the web-scale space. Additionally, it’s able to address the data center area and an entirely new set of customers for Nuage that also includes financial institutions.

Alcatel-Lucent partnered with Qualcomm in September last year and shipped its first small cells in the first half of this year, which is very promising.

Alcatel-Lucent announced a partnership with Intel for the virtualization and another with Thales in the Cyber Security domain. It also entered into two small investments first, an agreement with the EBlink, which began to compliment the distribution architecture of the small cells and second, an agreement regarding the counter attack around network security.

Alcatel-Lucent declared several virtualized functions as a part of its move to the cloud and to the virtualization, including the virtualized run to Mobiliy. It’s also believed to enable the company harness the benefits of cloud technologies with an entirely new approach to automating its customers operations.

Focusing in the right areas

Alcatel-Lucent has improved its profitability considerably due to its relentless focus on reducing costs. Alcatel-Lucent has continued to experience traction in net cash outflow, which reflects the operating profit improvement and value compensation as well.

Alcatel-Lucent has a new engagement model for Bell Labs to get closer to its portfolio lifecycle and to renew its speed and scale. Hence, it has recently introduced two new Bell Labs locations; the first in Tel Aviv in the cloud theme, and the second in Cambridge in the U.K., where it utilizes its expertise in video acquired from the previous acquisition of Velocix. Another launch in Mountain View is awaited in the coming months.

Alcatel-Lucent is also focusing on innovation by expanding the role of Bell Labs. Alcatel-Lucent is focusing on 4G and small cells, along with reshuffling the cost structure for returning to profitability by the end of 2015.

Alcatel-Lucent is looking for potential investment opportunities to expand its technology offering and develop ASN integrated solutions portfolio in the oil and gas domain for assisting the majors in the oil and gas industry in their subsea engineering operations when wet systems are used. Overall, Alcatel-Lucent is on the right path to execute its transformation plan and return to profitable growth and free cash flow generation.

Alcatel-Lucent plans to divest a part of its submarine-cables unit in an initial public offering as a part of the effort to turnaround the French network-equipment maker. The IPO, planned for the first half of 2015 is believed to enable the business to seek acquisitions and expand outside telecommunications into industries such as oil and gas.

Turk Telekom, the leading communication and convergence technology group in Turkey, has implemented Alcatel-Lucent's 7950 Extensible Routing Platform, or XRS. XRS is one of the most-advanced core routers available presently to meet the increasing capacity demands of data and video use as a result of rising base of more than 13.5 million access lines and 7.4 million ultra-broadband subscribers.


So, Alcatel is doing well to sustain its turnaround. Hence, investors should consider the stock for the long run as it can continue getting better due to improving demand for LTE infrastructure and the company's partnerships with illustrious customers to improve its standing in the market. As such, Alcatel-Lucent looks like a good turnaround opportunity for the long run.

Rating: 0.0/5 (0 votes)


Please leave your comment:

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial