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AlcaLu Tops 2007 Turkeys List

With Thanksgiving upon us, we've decided to revive our "Top Turkeys of the Year" list.

And regular readers shouldn't be surprised to see Alcatel-Lucent (NYSE: ALU) taking the top spot.

AlcaLu is ending the year as it began -- with a weak earnings report and a new plan that includes layoffs. (See AlcaLu Cuts 4,000 More Jobs and Russo Shakes Up AlcaLu's Top Team.)

But it's consistency that put AlcaLu atop the pecking order. Every quarter brought on some kind of disappointment, and AlcaLu management's assessment of the worsening situation didn't score many points with investors. (See Merger Tears Into AlcaLu's Sales and AlcaLu's Russo: We're Under Attack!.)

Plenty else went wrong this year, though. Other companies noted in the Top Ten Turkeys include:

One of them even made the list twice!

To find out more, read the full list here.

— Craig Matsumoto, West Coast Editor, Light Reading

gocowboys 12/5/2012 | 2:58:23 PM
re: AlcaLu Tops 2007 Turkeys List As we indulge (in the US) in over indulgence of turkey and stuffing, I had some reflective thoughts. It must be the triptophan. :-)

When this merger occured, ALA was at about $14.5; as I write this the stock is $7.37. That is a decrease of about $16B in market cap. Turkey breast is selling for about $6.99/lb on special at the local supermarket. Therefore the decrease in market cap amounts to about 2.3 billion pounds of turkey breast. It is even more in bologna. :-)

This is completely nuts. At this point we should be calling for the resignation of Ms. Russo, the board and Ms. Russo's underlings. There are a few Alcatel folks to also add to the list. :-) This is telecom at the worst. Happy Turkey Day!
desiEngineer 12/5/2012 | 2:58:20 PM
re: AlcaLu Tops 2007 Turkeys List I'm sure it's fun to bash AlcaLu, but if you compare ERIC to ALU, then ERIC lost $20 in share value after reporting one bad quarter - a lot worse than ALU losing $7 in share value in 3 quarters.

ERIC's consequent market cap dropped from about $69b to $38b. As you can see from the stock chart, Oct 15 - the pre-warning brought about the first drop from $43/share to $30/share or $70b to $50b, and then the confidence that ERIC wasn't like ALU kept it stable until the rumors that there was more weakness took it down to $23/share.

Why is ERIC not a bigger turkey than ALU on the basis of warnings and market cap loss? At least ALU can claim that they had a massive merger to deal with. What's ERIC's excuse?

-desi
Stefan Sip 12/5/2012 | 2:58:19 PM
re: AlcaLu Tops 2007 Turkeys List Comparing ERIC with ALU, one can make the observation that ERIC was expected to perform at a high level over the past 5+ years, while ALU was only expected to tread water. While ERIC's gravy train is clearly coming to an end, or at least significantly slowing down, ALU has consistently underperformed their already very low expectation. ALU wins hands down.
Stevery 12/5/2012 | 2:58:19 PM
re: AlcaLu Tops 2007 Turkeys List No disrespect Desi, but ERIC doesn't hold a candle to the incredible consistency of ALU. There is a famous Einstein quote: One definition of insanity is doing the same thing and expecting different results. ALU is the epitome of that definition.

And as for the rest: I raise my turkey fork in Craig's general direction for such a well-written article.
gocowboys 12/5/2012 | 2:58:19 PM
re: AlcaLu Tops 2007 Turkeys List ERIC has declined due to the general business climate (primarily in wireless). ALU has orchestrated an ill advised merger. Remember when everyone indicated that LU was not worth the money and Serge insisted that they were wrong. In addition, they put the exact management team in power that created the issues at LU with an expectation that they would be successful with the larger company. The results have been predictable. Finally, rather than dealing with the management issue, they have chosen to massively discharge or ignore employees that contributed to the ALA success (such as Mike Quigley et. al.).

The only thing missing from this turkey is the cranberry sauce. Desi...you sound like someone who works for this company?
desiEngineer 12/5/2012 | 2:58:19 PM
re: AlcaLu Tops 2007 Turkeys List My comments are not on whether ALU is a turkey - they are based on the reasoning that market cap loss is a measure of turkeyhood. I'd say ERIC should have won that award.

I re-read the article (significantly different from the first version) and clearly much better written. I think the reasoning is more elaborate than the first version (in which the distinction appeared to be based on loss of share price, etc.).

I have immense respect for ERIC as a well-run company with great products, and am still scratching my head about how they got hit by weakness for two quarters. They said it was NA, but it would appear that perhaps they are seeding the market with lowball bids elsewhere (BSNL, for example).

-desi
Pete Baldwin 12/5/2012 | 2:58:16 PM
re: AlcaLu Tops 2007 Turkeys List Desi, I was the one who insisted AlcaLu get the top ranking. Your original point about Alcatel/Ericsson was a good one. But my thinking was ... what's the ONE thing we've been talking about on these boards all year? Well, PBT, of course :) but the other one is AlcaLu's sinking fortunes. And at no point since the merger has the status seemed, you know, "good."

If Ericsson keeps it up, they'll be a shoe-in for a better spot next year. They probably should have gotten a higher ranking even here.
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