& cplSiteName &

Alcatel-Lucent Sharpens Its Focus

Ray Le Maistre
11/2/2012
50%
50%

By the end of 2013, Alcatel-Lucent (NYSE: ALU) is going to be a slimmer company, with a smaller head count and fewer managed services engagements.

It could be lighter in other ways too. On Friday's third-quarter earnings call, CEO Ben Verwaayen reiterated that he's looking to cherry-pick the best parts of the communications sector and be a significant player in those segments: The days of end-to-end are over (at least for AlcaLu).

To achieve that, AlcaLu will withdraw from some markets (and adopt a sales channel strategy) and sell some (unspecified) parts of its empire.

Whatever his next move, Verwaayen needs some positive proof points soon. The vendor's margins are on the slide and investors don't appear to care much for explanations and reasoning: AlcaLu's stock is down 9.5 percent to $1.00. (See Margin Misery for Alcatel-Lucent.)

Here's a snapshot of the some of the key points Verwaayen and CFO Paul Tufano made during their presentations and in their answers to questions from the analyst community.

  • Product lines that can't deliver decent margins will be "de-emphasized," Tufano noted. The company is examining a number of possible divestments, and not just of low-margin units, but Verwaayen wouldn't comment on how much smaller AlcaLu might be following any asset sales.

  • The company's efforts to generate revenues from its patent portfolio have so far failed to deliver. The arrangement with patent broker RPX has been renegotiated, and AlcaLu will now also engage with other similar companies in an effort to strike good deals. To accelerate patent licensing developments, Verwaayen will soon announce a new senior appointment who will be focused on this area. The CEO also noted that he has turned down a couple of patent licensing offers because they weren't good enough.

  • Exiting certain managed services deals, as previously announced, could hit the company's annual revenues by about €400 million (US$513 million) eventually, but margins would improve. The company is on course to "address" at least five managed services contracts that aren't delivering decent returns by the end of this year. (See Alcatel-Lucent Could Exit 25% of Services Deals.)

  • The company is reviewing its operations in 45 countries to see if it makes sense to withdraw and use sales partners instead.

  • In wireless/mobile, AlcaLu will focus on certain markets, particularly the U.S. and China. "We will focus on selective markets [and] disengage where we can't make a difference." Verwaayen cited the LTE TDD deal with China Mobile Ltd. (NYSE: CHL) and the lightRadio deal with Sprint Corp. (NYSE: S) as very significant. He also noted that, for mobile carriers, it wasn't just about the base station technology, but also the supporting network and software needed to run 4G networks. (See China Mobile Picks Alcatel-Lucent for LTE TDD and Sprint's First to Deploy Alcatel-Lucent's lightRadio .)

  • AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) each generated more than 10 percent of the vendor's revenues in the third quarter. Total revenues were €3.6 billion (US$4.64 billion).

  • The wireline business has had a new lease on life thanks to growing investments in fiber-based fixed broadband, whether fiber to the curb or fiber to the home/building. Verwaayen says the company's vectoring capabilities (boosting VDSL2 bandwidth using noise cancellation techniques) have been a hit in Europe, and that's looking like it's being replicated elsewhere. "We are the only one in vectoring with anything deployed. I can think of only one order we missed in this domain in the past three months." And in fiber access, "we are one of just two-and-a-half [major players] and we are sharing the gold medal," noted the CEO. (See TDC Trials Vectoring With AlcaLu, for example.)

  • The IP division is still recording tremendous success -- a 30.3 percent year-on-year increase in sales to €490 million ($632 million) in the third quarter -- and the new 7950 XRS core router has landed six contracts, only one of which has been announced. (See Alcatel-Lucent, Juniper Get Core-Router Upgrades and Verizon Builds an MPLS Metro With AlcaLu.) The company previously announced the broad strokes of its new organizational structure, which will come into effect on Jan. 1, 2013. (See Alcatel-Lucent Unveils Revamp.)

    But here's a bit more detail about the new setup.

    • The Networks and Platforms Group (networking, software and services) will comprise four business divisions: Core Networks (Optics and IP); Fixed Networks; Wireless; and Platforms
    • The Focused Businesses Group will comprise Enterprise, Submarine and the Strategic Industries division
    • Managed Services will be a standalone operation
    • The Global Sales and Marketing organization will "oversee and manage all customer-facing commercial relationships"
    • The Global Customer Delivery team will focus on creating a "unified and agile delivery capability"

    — Ray Le Maistre, International Managing Editor, Light Reading

    (1)  | 
    Comment  | 
    Print  | 
  • Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
    gtchavan
    50%
    50%
    gtchavan,
    User Rank: Light Beer
    12/5/2012 | 5:18:09 PM
    re: Alcatel-Lucent Sharpens Its Focus


    Here is what else you ought to do.  In your next opulent sales meeting for all of my-#&*%_don't-stink-sallary+comission sales guys, let them know that nothing goes out the door without a minimum margin and give them a list of dogs that are willing to sell below cost and ask them to hand out the list to the customers if thier target price is below cost. RESPECT THE BRAND.

    From The Founder
    NFV's promises of automation and virtualization are intriguing, but what really excites service providers is the massive amount of money they could save.
    Flash Poll
    Live Streaming Video
    Charting the CSP's Future
    Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
    Women in Comms Introduction Videos
    VMWare VP Brings Women Up With Her

    8|16|17   |   6:49   |   (1) comment


    It's an art and a science to make mentorship, inclusive leadership, diversity and promotion of high-potential women work, says Honore' LaBourdette, vice president of Global Market Development at VMWare.
    LRTV Documentaries
    5G Spectrum Wars – The Recap

    8|15|17   |   2:22   |   (0) comments


    Service provider 3 has filed a lawsuit against Ofcom over 5G spectrum auction in the UK.
    LRTV Custom TV
    Say What? Facebook Unleashes AI Anarchy – The Recap

    8|7|17   |     |   (0) comments


    A recap of the week's talking points on Light Reading's sister site, telecoms.com. Facebook AI programmers had a bit of a brain-fade as they allowed one of its AI applications to invent its ...
    Women in Comms Introduction Videos
    Fujitsu's Women Band Together to Help Girls Do STEM

    8|2|17   |   9:35   |   (1) comment


    Supporting women both inside and outside of Fujitsu is a top priority of the telecom vendor. Yanbing Li, Fujitsu Network Communication's director of System Software Development & Delivery, shares why it's important, but why there's still a long road ahead.
    LRTV Custom TV
    If You're Not First, You're Last – The Recap

    7|31|17   |   08:18   |   (1) comment


    In case you missed it, Amazon's 1% stock increase helped Jeff Bezos dethrone Bill Gates as the richest man in the world. Also, Taiwanese electronics manufacturer
    Women in Comms Introduction Videos
    AT&T's Tech President Preps Workforce for the Future

    7|26|17   |   5:47   |   (10) comments


    AT&T is focused on the software-defined network of the future and is reskilling its workforce to get ready too, according to AT&T's President of Technology Development Melissa Arnoldi.
    Women in Comms Introduction Videos
    Cisco: Mentoring Critical to Attract & Retain Women

    7|19|17   |   6:40   |   (1) comment


    Liz Centoni, senior vice president and general manager of Cisco's Computing System Product Group, shares why mentoring in all its forms is important for women and what Cisco is doing that's made a difference for women in tech.
    LRTV Custom TV
    Gigabit LTE With Snapdragon 835

    7|12|17   |     |   (1) comment


    At an event in Wembley stadium, EE used its live network to demonstrate gigabit LTE using a Sony Xperia XZ Premium smartphone with a Qualcomm Snapdragon 835 chip.
    LRTV Custom TV
    Implementing Machine Intelligence With Guavus

    7|12|17   |     |   (0) comments


    Guavus unites big data and machine intelligence, enabling many of the the largest service providers in the world to save money and drive measureable revenue. Learn how applying Machine Intelligence substantially reduces operational costs and in many cases can eliminate subscriber impact, meaning a better subscriber experience and higher NPS.
    LRTV Custom TV
    Unlocking Customer Experience Insights With Machine Intelligence

    7|12|17   |     |   (0) comments


    When used to analyze operational data and to drive operational decisions, machine intelligence reduces the number of tasks which require human intervention. Guavus invested in Machine Intelligence early. Learn about the difference between Machine Learning and Machine Intelligence.
    Women in Comms Introduction Videos
    Verizon VP Talks Network, Career Planning

    7|12|17   |   4:49   |   (0) comments


    Heidi Hemmer, vice president of Technology, Strategy & Planning at Verizon, shares how bold bets and the future of tech define her career.
    Telecom Innovators Video Showcase
    Masergy's NFV Journey

    7|11|17   |     |   (0) comments


    Ray Watson, vice president of global technology at Masergy, discusses the advantages and challenges in entering the still-maturing NFV market for the past three years.
    Upcoming Live Events
    September 28, 2017, Denver, CO
    October 18, 2017, Colorado Convention Center - Denver, CO
    November 1, 2017, The Royal Garden Hotel
    November 1, 2017, The Montcalm Marble Arch
    November 2, 2017, 8 Northumberland Avenue, London, UK
    November 30, 2017, The Westin Times Square
    All Upcoming Live Events
    Infographics
    With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
    Hot Topics
    Intel CEO Leaves Trump Biz Advisory Board
    Dan Jones, Mobile Editor, 8/15/2017
    Are Cord-Cutting's Days Numbered?
    Alan Breznick, Cable/Video Practice Leader, Light Reading, 8/14/2017
    Orchestration Startup UBiqube Pivots Away From NFV
    Carol Wilson, Editor-at-large, 8/15/2017
    Verizon Video Woes Pile On
    Mari Silbey, Senior Editor, Cable/Video, 8/14/2017
    WiCipedia: Dolly Babes, Manifesto Backlash & 'Brotastic' Failures
    Eryn Leavens, Special Features & Copy Editor, 8/18/2017
    Like Us on Facebook
    Twitter Feed
    Animals with Phones
    We Know a Tough Day When We See One Click Here
    Live Digital Audio

    Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

    During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

    She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.