AlcaLu Sells Fiber Stake
On completion of the sale, which is expected before the end of 2007, Draka Holding will take full ownership of the fiber vendor.
Draka Comteq, which is on course to generate an operating profit of €8 million ($11.5 million) in the second half of this year, was formed in 2004 when Draka and Alcatel combined their optical fiber and communications cable assets. Since then the company's financial results have been consolidated in Draka's financial statements. (See Alcatel Offloads Optical Fiber Biz and Alcatel, Draka Combine on Fiber .)
So what has prompted the sale? An AlcaLu spokesman says it's "a strategic decision, since we had a good opportunity to get out of this non-core asset and to help Draka further develop its business. Draka Comteq's development has been very successful so far, and now the company needs to further develop with other partners. We believe that for further development, Draka needs to have full control of Draka Comteq."
Industry chat suggests the vendor has been considering selling some of its assets to free up cash for acquisitions, and that the Draka stake sale might be the first of a number of divestments.
Analysts have been suggesting for some time that AlcaLu should reconsider its position in the mobile infrastructure market, an increasingly cut-throat sector that's had a negative impact on AlcaLu's financial performance in 2007. (See AlcaLu: Pressure Is Still On, AlcaLu Cuts 2007 Outlook by $1.25B, AlcaLu's Russo: We're Under Attack!, and Alcatel-Lucent Slumps on Q2 Loss .)
But in late October, as AlcaLu revamped its Carrier Business Group, CEO Pat Russo stated that the company is "not exiting any major areas of our portfolio." (See AlcaLu Revamps Its Carrier Business.)
AlcaLu declined to comment today on whether the cash from the Draka stake sale might be used to help make acquisitions, or whether further asset sales are planned.
News of the Draka stake sale helped AlcaLu's share price edge up €0.04, just less than 1 percent, to €5.20 in early trading on the Paris exchange.
Monday's trading had seen the stock's value drop more than 5 percent to €5.16 following a price target cut by analysts at UBS Investment Bank .
AlcaLu's share price is down nearly 53 percent this year on the Paris exchange.
— Ray Le Maistre, International News Editor, Light Reading