Why raising prices is never a consideration in reorganization plans? The only hope they have is to stop wrapping $100 bills to every box they sell. They must raise prices to be profitable and it is a matter of survival. All prices in all contracts have to be breached. They might PO a few customers in the short run but what can they do, sue them and shut they down completely and get no hardware? Besides, the Telco's need a minimum of 18 months to qualify a new source and at least 9 months on top of that to RFQ and short list all of the gazillion suppliers who bid. Frankly if others find out ALU has raised prices, they won't be giving such low ball prices and the industry will come back to a health.
I wonder what the price for Bell Labs would be if they decided to sell it off separately.
of course a lot would depend on what patent portfolio would come with the labs. considering the long deep patent pool with IP around nearly every part of modern communications, those patents from Bell Labs might be worth more than the entire company.
Alternatively, they could sell access to patents and IP in chunks. I'll bet I know some folks who would gladly buy several chunks of IP from the labs.
I recall suggesting just such a direction a few weeks ago, in a discussion with brookeseven.
Realistically, the IP division is the only product set that has strategic significance and tangible market credibility. When a carrier purchases IP platforms, its more than a box sale and that plays to some of ALU's strength.
Global competitors have copied & eaten ALU alive in optical, wireless & fixed networking. Those sectors are now viewed as "box sales" and commoditised. And thats perception is the single biggest reason why ALU are dead in the water.
You can add Nokia-Siemens alongside them, in the water.
The only other play, would be if a HP or Cisco were to make a move. If you could combine their core products into a suite of solutions that have real commercial value that could be their ace in the hole.
What those solutions would be, how they would sell them, etc, Is not something I would want to publish publicly, at this juncture. I wouldnt want to enable competitor counter-tactical using my posts and IPR.
Tbh, I doubt that HP. IBM or Cisco would make a move right now. It would be better to wait for Chapter 11, cherry pick the corpse without pension fund commitments, huge layoff payouts and other financial penalties that come from purchasing a "going concern"
The CEO and CFO have been asleep at the wheel from the beginning. As late as mid-May of this year, the CFO was on a road show to the former-Lucent HQ of Murray Hill, NJ and told everyone there that ALU was on target for a good 2Q. This tells me that there are no live-look controlling/monitoring systems of the financials. They have no idea on the financial performance of any project until the actual costs hit the system at the end of a project and they bounce those numbers against the revenue. Their Supply Chain organization is bloated and inefficient. The Sales force compensation is based solely on expected revenue instead of a mix between revenue and projected financial performance. With that in mind, the entire sales force is no better than a herd of used car salesmen.
The so-called "merger" was nothing more than an old man's attempt at a legacy after his retirement. Lucent brought zero value to the table. It would have been better to cherry pick the good parts (few of them) and leave the rest. One of the money pits that Alcatel took on was the significant represented workforce (i.e. union) that Lucent brought along with them. Add to that the adoption, in toto, of ALL of the business processes and systems used by a failing company (Lucent) and the demise of a world-leading company is an ultimate certainty.
Each region in the company and each group within that region has adopted a defensive silo mentality since the beginning and it will only get worse until ALU folds up. Most uf us give it til about 3 months before the debt payment comes due in 2014.
Ray -- Doesn't the abandonment of managed services represent a huge long-term decision for ALU? I understand the short-term issues re profitability, but the managed services initiative was intended as part of the transition from hardware vendor to a more full-service supplier.
mendyk, your post raises a question to me. Who is making a profit on Managed Services?
Always I read, and read that service is the future, but managed services? Is that the future? As I understand managed services should be a low margin service.
At least in here (Brazil), most of the companies are keeping its managed services operations to have foothold in the telecom operators. The profitability is just terrible. Additionally, for the consumer, the perception is that the service quality has degraded a lot on the last years, and I peronally think that the operators are not handling their operations completelly, and that caused the problem. Outsourcing is a bitch.
Maybe this is a limited point of view from the local market here in Brazil. Please correct me if I am wrong.
Is spinning out the IP division ALU's only hope?
And, if it did that, would it consign the rest of the company to the financial knacker's yard?
I wonder how many highly-paid financial advisers are in Paris right now... and whether any of them are earning their fees?
I tyhink we might see the vultures starting to circle.