Alcatel-Lucent (ALU) is one of the largest telecommunications manufacturers in the world, sitting in the same industry space as heavyweights Siemens (SI) and Ericson (ERIC). In the networking arena, ALU is taking on such names as Juniper and Cisco, and gaining market share. So, despite what has been circulating, Alcatel-Lucent is holding its own. What institutional investors have been focused on lately is ALU's portfolio of mobile and Wifi offerings. Now, you're probably saying, 'That's nothing to get excited about'. Well, actually there is.
Mobile carriers such as AT&T (T), Verizon (VZ), etc. have been clamoring for more spectrum as users continue to consume more and more content while on the go; video and audio streaming eat up enormous amounts of bandwidth, and now that 4G LTE is the industry standard, this appetite for bandwidth will only become greater and greater. So why don't mobile carriers just increase bandwidth for its users by buying more bandwidth from the FCC or other sources. For one thing, an allocation of spectrum is very expensive and two, excess spectrum has to be available in the first place; competitors tend to be less than accommodating in parting with their precious spectrum. So what can be done to alleviate this seemingly zero sum problem?
Alcatel-Lucent has an innovative and cost effect solution to this growing problem: use existing spectrum to increase available bandwidth, and allocate it to your most bandwidth hunger mobile apps. This is the architecture behind ALU's lightRadio technology. lightRadio essentially lets a user access bandwidth across a cellular and Wifi network (both public and private), in a secure and carefree manner, without having to worry about multiple logins at various Wifi hotspots. Users can roam between cellular and Wifi networks while knowing that their connection will be secure.
This is a technology that will succeed because it offers 'functional convenience'; it is easy and secure. We as consumers gravitate towards services that are convenient because they make our lives easier. This service offering will add to both top line and bottom line numbers for the carriers. In other words this is a win-win for both the carriers and Alcatel-Lucent. That's why I believe that ALU is an opportunity to seriously consider, and at its current market capitalization I also believe is a relative bargain.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ALU over the next 72 hours.