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Analyst Lowers Q4 View for AlcaLu

Ray Le Maistre
12/31/2009

Alcatel-Lucent (NYSE: ALU) is on course to miss Wall Street's fourth-quarter expectations because of a slowdown by carriers in North America, Europe, and China, according to Soleil Securities Group Inc. analyst Michael Genovese.

He believes European operators and Verizon Communications Inc. (NYSE: VZ) have reined in their spending during the fourth quarter, and that some network projects in China have been delayed, leaving AlcaLu with lower than expected sales for the final three months of 2009. The "bulk of the declines are in the Wireline, Optics, Enterprise and Services categories," he notes.

Genovese has lowered his revenues forecast for the vendor's fourth quarter to €4.17 billion ($6 billion) from his previous forecast of €4.39 billion ($6.32 billion), and expects earnings pre-share of $0.06, down from $0.10. On average, analysts are expecting revenues of €4.48 billion ($6.45 billion).

The Soleil man also expects AlcaLu to miss its target of adjusted operating break even for the full year: He forecasts a €143 million ($206 million) adjusted operating loss for 2009.

But the analyst sees this as a temporary setback only. He expects AlcaLu to gain market share in the IP router, mobile infrastructure, and packet/optical equipment sectors in the long term. (See AlcaLu Makes Its Packet-Optical Move and AlcaLu Scores Core 100G Win.)

In fact, he believes AlcaLu has had an impressive year in the IP router market, and expects the company to have increased its market share for 2009 to around 20 percent, from about 15 percent in 2008, at the expense of Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (NYSE: JNPR). (See AlcaLu Readies 100GigE Cards and AlcaLu Has the Edge in EMEA.)

With the exception of Huawei Technologies Co. Ltd. , which says it's still growing, 2009 has been a tough year for the major telecom infrastructure vendors. However, AlcaLu's CEO, Ben Verwaayen, is expecting improvements in 2010 and 2011 as the company continues to promote its applications-centric vision. (See AlcaLu Shows Off Its Apps Abs, AlcaLu Reports Q3, AlcaLu CEO Pitches Recovery Story, Asset Sale Helps AlcaLu to Q2 Profit, Hard Times for Alcatel-Lucent, and Huawei Predicts 29% Growth in 2009.)

— Ray Le Maistre, International News Editor, Light Reading

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Riders in the storm
Riders in the storm
12/5/2012 | 4:45:25 PM
re: Analyst Lowers Q4 View for AlcaLu


If you want to judge the health and future of a company, look at its human capital. In Alcatel's case, it is internal announcement after announcement that employees "leave to pursue other opportunities outside of the company".... Just amazing how many of the very best people have left, and keep leaving, the company. The arrival of Verwaayen only motived a new wave of staff  to "pursue other opportunities outside of the company". Alcatel is dying, that's the simple truth.... They are nowhere in 3G, nowhere in LTE, lost leadership in Optics to Huawei. BUT, became "application centric". Just some hollow marketing talk, but no beef anymore.

Stefan Sip
Stefan Sip
12/5/2012 | 4:45:25 PM
re: Analyst Lowers Q4 View for AlcaLu
The key to being a good analyst is to master the art of double talk. Everyone and their uncle know that China is spending their way out of the recession, including an obscene amount on telecom, which has been well documented here on LR. Yet, it is due to slowdown on Chinese and other projects that ALU will not be able to meet their Q4 expectations. Really? I can buy US and Europe, but not China in 2009.

I am also not sure how an application-centric ALU will be able to take leadership in optics, switching, wireless, etc. ALU is being more and more irrevelent on wireless. Try they will, but ALU simply does not have the scale it once had to be competitive to Ericsson and Huawei.

Whether we believe Huawei and ZTE are growing in 2009 or not, once all the radio, optics, etc cards are computed, I think we will see these companies grew their shipments by a large amount. Unless they gave everything away, they should have benefitted from NSN, ALU, and NT weakness in 2009.
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