It seems that in the tech sector new developments are a daily occurrence. One bit of emerging news from this sector is the announcement made by Mozilla that it will be launching Firefox OS later this year. The news broke on the CNN tech page saying that "Mozilla announced Sunday that it would launch handsets running its new Firefox mobile operating system, pitting itself directly against Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG)." Mozilla said in the same announcement that it is working with 18 mobile operators and four handset manufacturers; Alcatel Lucent SA (NYSE: ALU), LG Electronics, Inc. (066570: KS), Zte Corp.-H (763: Hong Kong) and Huawei Technology Co. Ltd. (002502. SZ). So we're making Alcatel our target, at least for this article. We'll consider if this development could begin a turnaround for the company.
Alcatel has been under fire since the revolution in the mobile world started. It couldn't cope with the high competition that came with the revolution and its stock has since then fallen substantially from its $82.88 high. It's not as if Alcatel isn't doing new business; it is. But to return to the helm of its industry and compete with the big players, it needs more than the sort of deals it gets these days; it needs a world-class deal. This raises a new question; is Alcatel's partnership with Mozilla that world-class deal that could turn things around?
First, it is important to note that emphasis was made on a potential competition against the big boys in this sector, which means this development could be world-class. Mozilla said that it aims to breakdown the walls between apps and the web with its new OS. This means that Firefox OS will work perfectly on "less sophisticated smartphones", which I expect means cheaper. Lower price could be a key weapon that will be used against the big players. As such, this is a potential market-moving development. And if it lives up to expectations by bringing huge competition against the likes of Apple and Google, then Alcatel should benefit from it since massive sales will be involved.
With respect to this development and its potential, it could be said that this stock is rather undervalued at the moment. However, it should be noted that a return to the top isn't a day's journey. As such, this deal could just be that springboard that Alcatel needs to initiate a dramatic return to the top.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.