In the financial world, investors are aware that Paris-based telecommunications equipment firm Alcatel-Lucent (ALU) is still dealing with losses - both in operations and revenue. However, if there is something that everyone knows about, it is that nothing is permanent. Alcatel-Lucent is determined, on a comeback and this may just be the ultimate reason why investors should not turn away from this stock right away.
Optimism for the Future
The announcement regarding the job cutbacks was not warmly welcomed by the Alcatel-Lucent employees as well as the French government. The company is hopeful though that this, along with its other financial strategies, will allow the company to save as much as $400 million on expenses this year. The company's funds will heavily concentrate on research and development. This will be quite useful especially now that ALU has moved from telecom products and services to in-demand networks, namely ultra-broadband and cloud.
There had been talks about Finnish tech company Nokia (NOK) becoming a possible ally or even merging wireless networks units over the last few months. The latter was intended to help Nokia compete with its rivals in the industry. However, Nokia has already confirmed that it will move on without Alcatel-Lucent. This will not stop ALU's optimism though, especially because ALU has outperformed the S&P 500 by more than 100% since the start of the year. In fact, ALU's price change is higher than that of Nokia's these past twelve months.
ALU aims to raise $2 billion in order for the company to finally resurface and be profitable once again. ALU has experienced over 200% stock value growth. Despite the controversies and poor performance in the market, it has received a decent amount of support and arrangements that will help it improve not only in Europe and America but also in Asia and the Middle East.
More Contracts and Deals
Earlier this month, it was announced that Alcatel-Lucent's Evolved Packet Core will power the4G LTE network of China Mobile (CHL). Aside from that, ALU has also been chosen as the solution provider to avoid hackers and distributed denial of service attacks. This is in partnership with Telindus Telecom, a global alternative operator based in Luxembourg. The main goal of ALU's solution, which was developed together with Arbor Networks, is to allow Telindus Telecom to seize and eliminate DDoS attacks in its network before they reach customers and its important enterprise infrastructure.
Also very recently, ALU and the Las Vegas Metro Police Department, together with other groups such as the Nevada Department of Transportation, were the first to respond during the trial of the 4G LTE public safety network that took place for six months in Las Vegas, Nevada. The public safety mobile broadband system with 4G LTE power is from ALU itself. The trial's purpose is to allow the responders to gain insight on how to use as well as recognize the benefits of high-performing mobile broadband. The technology has several new capacities and can use the existing systems of public safety departments. With ALU's help, the trial participants were able to test a number of its products including LTE eNodeB, a Service Aware Manager, a hosted LTE core, a data network gateway, and a service aggregation router. ALU's ngConnect Program members were also present to assist the participants in the trial.
It is Time to Buy
While there are analysts who are not fans of the stock, there are also some who have rated the stock a buy. Firms included Deutsche Bank which upgraded its hold rating to buy and Jefferies which also upgraded its underperform rating to buy.
ALU's stock price has risen massively in the past few months, a difficult achievement given the company's current status. It is clear that Alcatel-Lucent is gaining momentum for a critical turnaround. With its shift in focus, an optimistic future and an improved technology, ALU is a stock worth buying.