S&P Gets Negative on AlcaLu
While that means AlcaLu's credit ratings remain the same -- 'BB-/B' long- and short-term, for those who understand the system -- S&P's analysts are concerned "about the slow pace of improvement of Alcatel Lucent's margins and the group's large negative free cash flow." (See Signs of Stability at AlcaLu?)
In addition, the S&P crew is "also concerned that Alcatel Lucent's announced management changes could create further disruption for the company at a time when operating performance remains weak and carrier demand is softening." (See Russo, Tchuruk Out at Alcatel-Lucent.)
They added: "We may downgrade the company by one notch if operating performance (notably margins and cash flow generation) remains weak -- in particular if prospects for a mid- to high-single digit adjusted operating margin in 2009 recede -- and if Alcatel Lucent's liquidity position deteriorates unexpectedly."
AlcaLu's share price currently stands at €3.87, up slightly today but down 22 percent this year.
— Ray Le Maistre, International News Editor, Light Reading