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AlcaLu Down, But Not Out, in Q3

Phil Harvey
10/30/2008

Ben Verwaayen, the incoming Alcatel-Lucent (NYSE: ALU) CEO, made a noteworthy debut this morning, announcing the company's third-quarter results and promising to make AlcaLu operate in a simpler way, one that’s easier to understand and more focused on its customers’ goals.

Well, good luck with all that.

The equipment vendor reported a net loss of €40 million (US$51 million) in the third quarter, down from €345 million ($441 million) a year earlier when it took a wallop for some restructuring charges.

Revenues reported were €4.065 billion ($5.183 billion), down 6.6 percent from a year earlier. The company’s carrier operating segment reported revenues of €2.7 billion ($3.4 billion), down from €3.1 billion ($3.95 billion) a year earlier, so that segment of the company slowed about twice as fast as AlcaLu on the whole.

Verwaayen said the company’s full year 2008 revenues would be down by a low- to mid-single digit percentage from the previous year's, reflecting a general slowdown in carrier spending. But that's not a change in guidance -- and that seemed to cheer up investors who were looking to Verwaayen for some early signs of stability.

Also, Verwaayen hammered home a point that resonates with carriers -- that AlcaLu’s job is to enable those service providers to be more than "pipe providers." He said the company should help its customers deliver what he called carrier class Web 2.0 services.

Verwaayen said he’ll announce a new leadership team later this month and expound on a "new, simpler" business model for AlcaLu. By the end of the year, he hopes to have revealed the company’s strategic plan in full, and that’ll carry it onto February 2009, when it releases its full year 2008 results -- and when we’ll have a better measuring stick for how Verwaayen’s doing overall.

AlcaLu shares were up 0.33 (14.29%) to $2.64 in mid-morning trading on Thursday.

— Phil Harvey, Editor, Light Reading

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acohn
acohn
12/5/2012 | 3:28:18 PM
re: AlcaLu Down, But Not Out, in Q3
Do you know how many ALU Account people we have gone through? I dont know who the latest one is but he we have Lucent equipment in our network older than he is. I should learn Chinese to be able to tell my other vendor you can have all my business.
optodoofus
optodoofus
12/5/2012 | 3:28:18 PM
re: AlcaLu Down, But Not Out, in Q3
It is truly amazing what passes as "good" news to Lucent investors. Our revenues are down again, but we're not doing any worse than we predicted. Let's all stand up and cheer.

If AlaLu thinks that focusing on "carrier class Web 2.0 services" going forward is going to make a difference, they are fooling themselves. What the company needs to do is merge competing product lines, scrape off thousands of redundant jobs, clean out the exectuive layers that led them into this mess and get back to the business of making high quality products that their customers need. It can be done, and they have some areas of great promise (for instance, the Timetra IP line, some great optical IP, etc.). But they need to execute: something they have not done in years.

If Ben is willing to roll up his sleeves, make painful (and unpopular) decisions to rationalize their product offerings and lay off a bunch more people, then the company has a shot.

Albert Einstein was not referring to Alcatel Lucent when he said "The significant problems we face cannot be solved by the same level of thinking that created them", but it sure seems to fit.

optodoofus
K28.5
K28.5
12/5/2012 | 3:27:37 PM
re: AlcaLu Down, But Not Out, in Q3
optodoofus says: "What the company needs to do is merge competing product lines, ..."

What the chances ALU closes the 1850 TSS product line which is in direct competition with the 7450 ESS, clearly the more successful of the two?

K
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