Alcatel-Lucent (ALU) is a leader in many aspects of information and communication technology. The company has an international presence with notable market dominance in Europe. The following is a partial listing of Alcatel-Lucent's products and services:
- Cloud and data center services
- Microwave transmission technology
Admittedly, such product diversity is not always an asset in terms of company performance. Development, production, legal and other costs associated with all these products cut into profit margins that are further squeezed by competitors that specialize in a narrower facet of information technology.
Another Alcatel-Lucent strong point is its award for innovation and sustainability research. These and other prominent company assets generate a bullish outlook on Alcatel-Lucent stock.
Product Development News
Alcatel-Lucent is heavily investing in R&D in hopes of becoming a market leader in microwave transmission technology. Recently, the company rolled out a proof-of-concept for a new product: the Microwave Packet Radio long-haul system. Alcatel-Lucent's proof of concept boosted confidence and global demand. The Microwave Packet Radio long-haul system is good for general connectivity and access to the Cloud where optic fiber connections are too expensive or otherwise prohibitive. This and other products and services are to be deployed in the vast European and Asian markets along with the U.S. market. Such a development bodes well for Alcatel-Lucent equity investors.
The company is involved in several acquisitions and partnerships. It has had some trouble with smooth transitions and agreements in the recent past, but it seems that lately there is some emerging synergy and clarity. Among the most prominent recent moves by company executives has been to ink a deal between Alcatel-Lucent and Nokia (NOK). This partnership will help Alcatel-Lucent compete with Ericsson (ERIC), and Asian giants Huawei and ZTE Corporation in the growing Chinese mobile device market.
Detailed evaluation of corporate strategy and business plans can be a tricky affair when it comes to large companies operating internationally and providing many products and services. Luckily, there are some hints that Alcatel-Lucent's management knows what it is doing. Consider that Alcatel-Lucent was named leader of the Hardware Technology & Equipment industry group by the Dow Jones Sustainability Indices (DJSI) in 2013. The award was justified. 10% of all patents owned by Alcatel-Lucent and its affiliate Bell Laboratories are for environmentally friendly, sustainable products and processes. It is also important to note that such an award is not a one-time fluke. The DJSI has picked out Alcatel-Lucent as an industry leader since 2011. Other prominent honorable mentions include being among the Top 100 Global Innovators by Thomson Reuters in 2012 and MIT's recognition of Alcatel-Lucent as one of the "Top 50 of the World's Most Innovative Companies."
These recognitions, by themselves, are not meant to invoke bullish sentiment since they are a bit outdated. Their value to the company has already been incorporated into ALU stock price. Rather, the point is that these awards are a result of wisely directed R&D as well as smart hiring and retention practices. Admittedly, a recent countertrend by recently appointed CEO Michel Combes is to implement cost cuts and focus on fewer, more profitable product lines.
These kinds of top-level decisions are very popular in the corporate world. Cost cuts and specialization are familiar themes in many companies. However, not many companies have recurring honorable recognition by institutions with very high standards of corporate conduct and achievement. Alcatel-Lucent is one of very few that can boast of such a resume. This fact hints at intelligent and coherent management throughout the corporate hierarchy, not just clever financial tricks at the executive level. Therefore, it is likely that the future will see Alcatel-Lucent rewarded with distinguished honors that correspond with successful products, customer satisfaction and consequent stock appreciation.
Industry Insider Opinion
Regarding analyst and insider opinion, it is worth noting that professional investors with the Raymond James financial services company see upside potential for Alcatel-Lucent. Such optimism is based on Alcatel-Lucent's high-margin products and strategic partnerships that will further develop sales and revenue streams in many parts of the world.
Alcatel-Lucent operates in the volatile, competitive and fast-paced technology sector. Short-term price swings should not deter from a focus on company fundamentals. Recent product development news, corporate partnerships and a history as an industry leader all make Alcatel-Lucent merit a "buy" recommendation.