Light Reading

AlcaLu CEO Likes His Product Lineup

Craig Matsumoto
LR Mobile News Analysis
Craig Matsumoto
5/23/2012
50%
50%

SANTA CLARA, Calif. -- Alcatel-Lucent (NYSE: ALU) has all the pieces in place for future growth; it's just that you can't see the results in the quarterly reports, CEO Ben Verwaayen told analysts at the company's annual Technology Symposium.

Speaking in a fireside-chat setup on Wednesday morning, Verwaayen insisted AlcaLu has a solid strategy in place that's dictating all product directions.

But of course, that progress doesn't politely show up once a quarter. Some big fiber-access wins in China, for example, haven't delivered a boost in revenues yet. (See Bad Start to 2012 for AlcaLu.)

What AlcaLu is missing, he contended, isn't the ability to progress but the "capability to do that in a less volatile way than we're doing."



"You could say in the past we were an assembly of products looking for a strategy," Verwaayen said. Now, AlcaLu has an overall strategy, accepted by carrier customers, that all products are adhering to, Verwaayen said. And to simplify the business, the products have been consolidated into three areas: access, core and services.

Service Provider Information Technology (SPIT) is certainly an underlying current, running underneath every product line. (See AlcaLu CEO Unveils New Vision.)

And cloud networking is a major initiative with nicely high margins -- in fact, AlcaLu's CloudBand platform officially launched Wednesday, with Texas-based carrier Transtelco announced as the first customer. (For more about AlcaLu's cloud ambitions, see AlcaLu Unveils Its Carrier Cloud Play.)

But in summarizing the state of the business -- something he was doing off the cuff, in response to a question -- Verwaayen stuck to familiar territory for most analysts, going down the major sectors of the network.

The access business, which looked like a commoditized wasteland two years ago, is hot, thanks to China's buildouts and the advent of higher-speed copper technologies. "China's plan for fiber access is unprecedented, and we are absolutely right in the middle of it," Verwaayen said. (See China Unicom Expands GPON With AlcaLu and AlcaLu Wins China Telecom Broadband Deal.)

In wireless, AlcaLu had some catching-up to do in radio, he said. But the rest of the wireless network, including backhaul, is moving to IP routing and focusing on video delivery. "In that next generation of technology, we have, I think, a better position than many of our competitors do," he said.

AlcaLu's best position might be in the convergence of the optical and IP networks. "We have an opportunity there to dominate," he said.

That's partly because AlcaLu is the only major vendor besides Huawei Technologies Co. Ltd. with a longstanding presence in both optical and IP. But there's also been a change in the market. The "customization frenzy," where every carrier wanted something slightly different in optical, is ending as optical and IP intertwine, he said.

One potential obstacle to AlcaLu's plans is the economy, of course -- particularly the precarious European economy. Verwaayen wouldn't offer any new speculation about what's going to happen there. "If the sky falls, the sky falls," he said.

— Craig Matsumoto, Managing Editor, Light Reading

(13)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:32:14 PM
re: AlcaLu CEO Likes His Product Lineup


Unless they announce profit growth why would investors raise stock price?


seven


 

DCITDave
50%
50%
DCITDave,
User Rank: Light Beer
12/5/2012 | 5:32:14 PM
re: AlcaLu CEO Likes His Product Lineup


Simon Leopold's note today mentioned that AlcaLu's stock price is confounding. It doesn't go up no matter what the company announces. Seems more "rethinking" may be in order and that's too bad because the Street doesn't seem to be giving Big Ben credit for all the good he's done so far.


 

macster
50%
50%
macster,
User Rank: Light Bulb
12/5/2012 | 5:32:12 PM
re: AlcaLu CEO Likes His Product Lineup


Indeed. In the near term, we can all understand, given the current climate. In the longer term, some are asking as to what comes next, what comes after mobile broadband, cloud, etc.


On the operator end, there's been noises/grumblings re. subsidies. See link. Vodafone also mentioned billions in subsidies.


http://online.wsj.com/article/SB10001424052748704559904576230143896332886.html


But you are spot on - it does not address revenue growth.

Soupafly
50%
50%
Soupafly,
User Rank: Light Sabre
12/5/2012 | 5:32:11 PM
re: AlcaLu CEO Likes His Product Lineup


It comes down to people been very tired of hearing the same sounds time & again.


The stock price has been punished because of that credibility gap.


Its ironic that the same funds, analysts, inter alia cast that stuck with the "old" A-L team are now punishing the "new" one. The quote marks are because the sequence of failure at the company has been nothing short of scandalous, and the perpetual investor apathy, equally so.


@ Seven; I see your point, but disagree on profit growth. Obviously thats important but the stock has been hammered & marked down for succesive under-performance. If they can stabilise the ship and show that's happening, over any kind of consistent time-frame the price should rise - regardless of profitability or margin %. Why? To correct the over-compensatory "negative" posture some investors adopted. Summary: The stock price of a company is based on more that just profitability.


@ macster; What comes after mobile broadband, cloud?? Facepalm! Your either joking or have to be talking way beyond any timeframe anyone in the industry will credibly comment on. I would guess 5-10 years minimum.


I know of no-one who could or indeed would give you any kind of intelligent reasoned answer on what happens "after" those trends given that we are barely at the start of these revolutions, and their combined impact, has already changed the industry. 


But please, correct me...can you share with us what you think comes after MBB & Cloud?? I am ALL ears.

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:32:06 PM
re: AlcaLu CEO Likes His Product Lineup


Soup,


 


Losses will drive the stock price to 0.  The stock is not underperforming.  The company is.  What I tried to say in a short and sweet way is this:  New products are wonderful but to date they are not delivering profits.  Profits are what matter and the new products are only a means to the end.  There have been so many announcements without profits that nobody will care until they have profit.


 


seven

ecipo
50%
50%
ecipo,
User Rank: Light Beer
12/5/2012 | 5:32:05 PM
re: AlcaLu CEO Likes His Product Lineup


Couldn't agree more!

TGIR
50%
50%
TGIR,
User Rank: Light Beer
12/5/2012 | 5:32:02 PM
re: AlcaLu CEO Likes His Product Lineup


They did deliver profits last year.  Note that they actually have a PE ratio.

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:32:02 PM
re: AlcaLu CEO Likes His Product Lineup



Q1 (Mar '12)2011Net profit margin-8.27%


seven


 

macster
50%
50%
macster,
User Rank: Light Bulb
12/5/2012 | 5:32:01 PM
re: AlcaLu CEO Likes His Product Lineup


Can understand that Q1 is usually weaker than the other quarters, but the drop in revenue and GM is a cause for concern. Then you throw in things like the fact that they're still free cash dlow negative (albeit improving), it's hard to see how their share price can rise. Also don't agree with the sale of their call-centre business.


All this in a time of "revolution". Hence more are asking, what comes next?


Saying that, they do look cheap now.

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:31:55 PM
re: AlcaLu CEO Likes His Product Lineup


 


And from Schwab they have a PEG of less than 1.  That means people think there is risk in the stock.  If you look at a chart over the last 3 years they have lost money in about the same number of quarters as earned it.  Most of their money (about 75% last year) is made in Q4.


To get a better stock price - get earnings EVERY quarter - grow them EVERY year - and eliminate downside risk.  Pretty simple game.  Which ALU does not do.


seven


 

Page 1 / 2   >   >>
From The Founder
Against the odds, Huawei is growing its telecoms networking equipment business in the US -- that should be ringing some alarm bells for domestic vendors.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Between the CEOs
CEO Chat With Jeff Miller, ActiveVideo

8|28|15   |   19:05   |   (0) comments


Jeff Miller, President and CEO of ActiveVideo, talks to Light Reading founder and CEO Steve Saunders about the impact of virtualization on the TV and video distribution market.
LRTV Huawei Video Resource Center
Vodafone: Mobile Money Is About Customer Trust

8|27|15   |   06.36   |   (0) comments


Light Reading spoke with Vodafone's Ian Ravenscroft about the unique responsibilities and opportunities facing operators handling customers' financial transactions over the network.
Telecom Innovators Video Showcase
Palo Alto Networks on Expanding in the Carrier/Service Provider Market

8|26|15   |   07:54   |   (0) comments


Alfred Lee from Palo Alto Networks tells Steve Saunders about their new chassis-based system, the PA-7080, and how it can benefit service providers compared to legacy firewalls.
LRTV Custom TV
Global Services Forum Preview

8|25|15   |   02:36   |   (0) comments


Light Reading's CEO and Founder Steve Saunders talks about Huawei's upcoming Global Services Forum with the help of Heavy Reading's Patrick Donegan and Teresa Mastrangelo.
Telecom Innovators Video Showcase
Infoblox on DNS Threat Index

8|19|15   |   04:39   |   (0) comments


Dilip Pillaipakam from Infoblox talks to Steve Saunders about his company's core network services.
Between the CEOs
CEO Chat With Ihab Tarazi, Equinix

8|14|15   |   20:18   |   (1) comment


Equinix CTO Ihab Tarazi talks to Light Reading founder and CEO Steve Saunders about the dramatic changes in the data center, cloud and interconnect markets and discusses the impact of SDN and NFV in the coming years.
Telecom Innovators Video Showcase
The Netformx Ecosystem

8|14|15   |   09:39   |   (1) comment


Ittai Bareket, CEO of Netformx, talks with Steve Saunders about the Netformx Ecosystem, which employs cutting-edge prescriptive analytics to help solution providers maximize profits.
Telecom Innovators Video Showcase
Versa Networks on Leveraging VNFs

8|12|15   |   07:37   |   (0) comments


Kumar Mehta, founder and CEO of stealth mode startup Versa Networks, talks with Steve Saunders about how providers can best leverage virtualized network functions (VNFs).
LRTV Custom TV
Transforming the Network Through OPNFV

8|5|15   |   7:09   |   (0) comments


Sandra Rivera, VP Data Center Group; GM Network Platforms Group, Intel Corporation, on OPNFV Arno and how the industry is coming together to accelerate the deployment of NFV and transform the network.
LRTV Huawei Video Resource Center
Huawei ONS Product Demo

8|3|15   |   6:01   |   (0) comments


Huawei shows at Open Networking Summit 2015 in Santa Clara how its SDN and NFV solutions embrace openness.
LRTV Custom TV
End-User or Enterprise Benefits to the New IP

7|30|15   |   04:27   |   (1) comment


Andrew Coward discusses what the New IP means to end users or enterprise customers. He explains compelling reasons, including how every customer can get their own network, from the transformation to the New IP.
LRTV Custom TV
Network Visibility & the New IP

7|30|15   |   02:23   |   (0) comments


Mukund Srigopal provides an explanation of what network visibility is and how it is essential as service providers transition to the New IP. In addition, the importance of the network packet broker is discussed.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Infographics
Cisco's cloud and virtualization portfolio can increase business agility and innovation by building a more flexible network architecture.
Hot Topics
T-Mobile CEO Plays Data Traffic Cop
Sarah Thomas, Editorial Operations Director, 8/31/2015
Verizon Hums a Driving Tune
Sarah Thomas, Editorial Operations Director, 8/26/2015
CEO Chat With Bill Gates
Steve Saunders, CEO and founder, Light Reading, 8/31/2015
Time to Monetize Cable WiFi
Alan Breznick, Cable/Video Practice Leader, 8/31/2015
Like Us on Facebook
Twitter Feed
September 22, 2015
Media Begins With “Me”
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
The scene: Last Saturday, lunchtime, the interior of a shi-shi-foo-foo eatery in Manhattan's SoHo district.
Jeff Miller, President and CEO of ActiveVideo, talks to Light Reading founder and CEO Steve Saunders about the impact of virtualization on the TV and video distribution market.
Cats with Phones
Tastes Like Fish Click Here
Please hold while I lick the phone.