Lucent Systems Inc. (NYSE/LU) is actually a stock that wants some major loving. This previous Wall Street darling has been discarded by the herd and is particularly now on the lookout for some really like on the Street. Investing at practically $eighty in late 1999, the stock like quite a few Other people in the communications sector is below severe pressure recently, dealing with lackluster income advancement and anemic earnings.
Lucent has also undergone its check here share of lawsuits. Irrespective of some recovery in the communications sector, the realm stays a hard place to function. The Level of competition is intense, pricing pressures are expanding, and margins are low.
That's the truth to the communications sector, an area That is still in limbo offered The existing weather. So precisely what is Lucent suppose to complete? Shareholders have missing patience in the ability of chairman and CEO Patricia File. Russo in turning close to the company and which makes it a star all over again.
Down 96% from its late 1999 higher, the fact is traders who bought at that stage and even lower will most likely under no circumstances Recuperate their losses. Lucent won't ever be in excess of a money decline for those who purchased at the higher and inflated charges.
The corporation is generating cash and its forward selling price-earnings various is sensible, but presented the slow expected advancement the stocks upside may be restricted.
Given the combined outlook with the communications sector, Lucent is trying to acquire a significant hug from rival and likewise troubled France-dependent Alcatel SA (NYSE/ALA).
Lucent soon after staying rejected already by Alcatel in 2001 is hoping this next try is met with hugs and kisses, something they like to do in France.
Alcatel is examining the opportunity merger with Lucent, however it is while in the drivers seat as its posture is far better than that of Lucent. In other words, Lucent demands Alcatel extra.
But for Alcatel, a merger with Lucent could give the company much more publicity and a longtime community in The us.
The deal if consummated may very well be the 1st of numerous more to come back as struggling telecom corporations look for tactics to cut Price tag and contend more proficiently.
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