Boston, MA 10/21/2013 (wallstreetpr) – The French-based telecommunications equipment company Alcatel Lucent SA (ADR) (NYSE:ALU) is an embattled business. The company has been known to be bleeding for some years now, but now it’s bleeding even profusely that some in the market and government have started countdown to its shutdown. Are things that bad at ALU?
By close of trading Friday, October 18, the company was holding onto $8.29 billion in market value. This is a far cry from what this telecoms equipment company used to be in its heydays. At the Friday’s closing, the company shed 2.67% in share value to drop hard to $3.65. At this rate of value hemorrhage, the company could become a penny stock sooner than later. Today’s trading will be closely watched for signs of rebound if any.
Seemingly, it is not enough that the company is cutting 10,000 jobs domestically and globally. At least 900 jobs are set to be lost in France alone. And this job cut in France does not sit well with the government and the lawmakers because it comes at a time when the country itself is struggling with bulging unemployment levels.
It is even reported that the company’s CEO Michael Combes has warned his employees that if a turnaround could not be achieved soon, then ALU could disappear from the corporate radar. But if anything, the company has already disappeared from the heart of most of its investors. Nothing better illustrates this than the huge trading volumes which essentially indicate that investors are giving up their hold on the stock, at least before it sinks into the penny market.
In order to understand where ALU is going, a peep into history can help uncover some industry blunders that may have led to this once giant company to hang precariously. In 1998, Alcatel sold off one of its business unit in the power generation and transportation segment. That unit was known as Alstom. Another part of Alcatel to go was Nexan in 2002, preceding its merger with Lucent in 2006. These units, analyst say, if were retained would have help the company to earn more profits, develop more competitive technology and stand up strong against its competitors.
Whether these were wrong calculations that have pushed ALU to the edge of the cliff or the company’s technical team has just run out of ideas will still remain hotly debated topics. What is not debatable though is that ALU is approaching its shutdown.
