Boomerang Rumor

2:45 PM -- Less than two years after it last appeared, the telecom hardware sector's boomerang rumor -- that Huawei is planning a takeover bid for Alcatel-Lucent (NYSE: ALU) -- has swung back into the public domain, reports Bloomberg, giving AlcaLu's stock a boost.

The vendor's share price jumped 6.4 percent Thursday on the Paris exchange to €3.83. So far this calendar year, the stock is up by more than 60 percent, albeit from a shockingly low starting point. AlcaLu's capitalization is now €8.88 billion (US$12.4 billion).

The last time this rumor gave AlcaLu's stock a lift was in August 2009, unless we missed it swinging back around while ordering a round at the Black Door. (See Rumor Mill Boosts AlcaLu.)

And each time it comes around the rumor boosts AlcaLu's stock, even though there is more chance of the Toronto Blue Jays winning the World Series in 2011 than there is Huawei buying a company that is so strong in the U.S., given the current sentiment toward the Chinese vendor in the U.S. of A. (See Huawei Sheds 3Leaf, Huawei's Open Letter to the US and Huawei's Rep Repair.)

Besides the two companies have such a massive overlap in product portfolios that such a merger doesn't make any sense. Still, Huawei issued a denial that it isn't interested in such a move, and that eased AlcaLu's share price back a little from its day high of €3.99.

But is it fair to attribute all of AlcaLu's gains to the rumor? The stock is on an upward trajectory following a series of positive news points and greater confidence that the relatively new management team can pull the company out of the post-merger mire into which it sunk in 2006-2009. Some of the gains, surely, can be put down to investors spotting a stock on the rise and sensing that AlcaLu has some momentum in key telecom areas. (See MWC 2011: MWC Is Booming and AlcaLu Ends 2010 on a High.)

— Ray Le Maistre, International Managing Editor, Light Reading

pdonegan67 12/5/2012 | 5:11:12 PM
re: Boomerang Rumor

China Mobile will buy "3" UK before Huawei buy ALU.

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