x
Optical/IP

For Lucent, the Only Way Is Up

Lately, investors may be likening their Lucent Technologies Inc. (NYSE: LU) shares to the big bag of canned goods on a TV game show -- they'll have to do as a consolation prize absent the enormous riches that once seemed possible.

Lucent's stock has been on a tear lately, climbing about 36 percent from July 3 to July 9. In late morning trading Wednesday, Lucent shares were up $0.09 (4%) to $2.13.

There are several tiny reasons why its shares are going up, but no definitive event for investors to rally around.

"In general, people are getting a little more comfortable with Lucent's balance sheet," says A.G. Edwards analyst Greg Teets. "They look to be in a good position to weather the storm better than some of their competitors."

Adding some wind to Lucent's sails is the fact that Tuesday evening Nortel Networks Corp. (NYSE/Toronto: NT) was among several stocks booted from the Standard & Poor’s 500 Stock Index, one of Wall Street's most widely followed stock market indices. Also, on Wednesday, Moody's Investors Service cut its ratings on Alcatel SA's (NYSE: ALA; Paris: CGEP:PA) debt, a move that makes it harder for the company to borrow money at competitive rates.

There's also the fact that those who short sold the stock and made money while Lucent shares were crashing are now "covering," or buying shares to replace those borrowed during the short sale. "There's no great risk/reward [ratio] here," says Bryan Bigari, an analyst at Fulcrum Investment Group, the Chicago hedge fund. "[Lucent] has better than a 50 percent chance of staying alive, and [short sellers] have already made a ton of money" shorting Lucent shares.

In the unconfirmed rumor department, there was once chatter of General Electric Co. being interested in buying some or all of Lucent's business. Mention of that rumor is increasingly being met with quizzical stares, however.

Lastly, there's the "Why not" theory: With all telecom stocks looking as bad as they do, Lucent, with a household name, relatively new management, and cash in the bank, makes some investors say, "Why not?"

"After 18 months of continuous selling, that's what happens," says David Segelov, a general partner at Ballarat Capital, a New York money management firm.

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
Page 1 / 3   >   >>
WDMer 12/4/2012 | 10:07:50 PM
re: For Lucent, the Only Way Is Up although not related to the real news here,
whats the "short selling" and how people have
made ton of money in this dismal stock market?
just curious!
rafaelg 12/4/2012 | 10:07:48 PM
re: For Lucent, the Only Way Is Up In a nutshell is very simple

Short selling is when you sell your stock below what the going price is with the asumption that it will go lower than the present value. Brokers offer this and buy large amounts of stock, which they in turn sell it right away. The cushion that is developed ( usually a short sale is opposed by the company that owns the stock since they lose money when one short sales it)allows for the buyer to sit on the stock for a few days. The short sale price is sometimes 50% of the going rate.
hitekeng 12/4/2012 | 10:07:48 PM
re: For Lucent, the Only Way Is Up You borrow stocks at let's say $2.00 per, on the hope it will be going down. You then sell at let's say $1.50 pocketing the difference and buy at the lower price to replace the borrowed stocks.
So when Nortel issued some millions of shares recently, evrybody was shortselling the stock on the premise it will be going down due to dilution and over 700 million shares changed hands at the time in one single day.
At any rate, you can check this site and many others for more details on risks involved with short-selling http://www.trade10.com/short_s...
...
dodo 12/4/2012 | 10:07:47 PM
re: For Lucent, the Only Way Is Up "Adding some wind to Lucent's sails is the fact that Tuesday evening Nortel Networks Corp. (NYSE/Toronto: NT - message board) was among several stocks booted from the Standard & PoorGÇÖs 500 Stock Index, one of Wall Street's most widely followed stock market indices".

Phil
Nortel was not BOOTED. It's a decision taken by Standards and Poor to have the 500 Index "All American" at the requests of the street. Nortel is not alone. There are 4 more canadian companies plus 2 European.

BTW: According to the S&P ,Nortel is still in the S&P/TSX 60 index and the S&P Global 1200 Index.
lastmile 12/4/2012 | 10:07:47 PM
re: For Lucent, the Only Way Is Up This article resembles some of the stock message board postings.
Light reading should discuss telecommunications in a serious manner with special emphasis on product development and their impact in this industry.
These kind of articles do not lead to any specific conclusions but induce a lot of gossip.
JMHO
poptical toze 12/4/2012 | 10:07:45 PM
re: For Lucent, the Only Way Is Up After reading the other answers, I thought this was still a little cloudy so here's my attempt to shed a little light.

In short selling, the first thing you do is tell your broker you want to short sell a stock. What he'll do is loan you the stock. Let's say 1000 shares at $2.00. You then sell that stock to someone else and collect $2,000.

In the future, if the stock goes down to let's say $1.50, you then instruct your broker to settle by buying 1000 shares at $1.50. You pay $1500, return 1000 shares to your broker, who you're now even with and you've just made $500. You can see how if the stock goes up you've just lost money.

The reason your broker will do this is because first off you must keep a percentage of your transactions in a security account. Secondly, picking losers isn't much easier than picking winners, so it's probably roughly a 50/50 shot as to whether you'll actually make money on a short or lose it, so it basically comes out even for the brokers in the end. A margin call is when the broker demands cash for the loan either because the security account isn't large enough or they feel too exposed because it's going the wrong direction.

Hope that helps.

PT
BobbyMax 12/4/2012 | 10:07:45 PM
re: For Lucent, the Only Way Is Up Lucent has the following problems:

-- Lack of management and product planning skills in order bring continuity in the product lines

-- Lack of Marketing and Sales skills

-- Waste of money on frivilous activities

-- Non-productive Bell Labs workforce

-- Lack of outsourcing skills

-- Lack of cost cutting skills

-- Lack of leadership skills

-- More focus on Affirmative Action than well being of employees. Affirmative action inspired promotions

-- No value of education within Lucent. Extremely bad hiring practices. The company has virtually shut down the hiring of mature employees

-- Sending employees to tradeshows who cannot corectly explain the product lines. They also can explain competing products from other vendors

-- Too many employees maintaining bank hours

-- Unproductive workforce

-- Lack of team spirit among employees

-- Multiple locations making it harder to organize and utilize the workfoce more effecrtively

Hopefully this would inspire some debate in the company.

GreatFallsNetworks 12/4/2012 | 10:07:44 PM
re: For Lucent, the Only Way Is Up Let me know which company you work for.
I dont want to buy that stock. I know what you do in productive hours writing such big mail.
rafaelg 12/4/2012 | 10:07:44 PM
re: For Lucent, the Only Way Is Up This article is just a bunch of meaningless and misguiding speculation. Anyone with half a brain knows that one cannot go by percentages. If I have a $.01 stock, a 1-cent increase will translate to be a 100% climb!! The lower the value the less important the percentage becomes.
LR are you filling space?

"Lastly, there's the "Why not" theory: With all telecom stocks looking as bad as they do, Lucent, with a household name, relatively new management, and cash in the bank, makes some investors say, "Why not?"

Household name? When was the last time anyone bought a refrigerator or a stove named Lucent?
ivehadit 12/4/2012 | 10:07:44 PM
re: For Lucent, the Only Way Is Up bobby,
you seem to have a lot of insight into lucent.

if you're still there, why?

if not, [your pick here].

examples of your flawed focus on ethnicity and age, you say:

-- More focus on Affirmative Action than well being of employees. Affirmative action inspired promotions

-- No value of education within Lucent. Extremely bad hiring practices. The company has virtually shut down the hiring of mature employees

or did you mean +»mmature employees".
Page 1 / 3   >   >>
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE