Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Tuesday, July 11, 2006

Most Widely Traded 48 Hour Clock: Lucent Drags Alcatel

24/7 Wall St. has begun coverage of the 36 most widely traded stocks, eighteen each from the NYSE and the NASDAQ. Most of these stocks trade over 50 million shares a week. This new feature will highlight each of the 36 stocks at least every 48 hours giving investors fresh infomation and perspective on the companies whose shares are most likely to move the broader markets.

Stocks: (ALA)(LU)

To no one's surprise, Lucent's proft problems pulled down the shares of merger partner Alcatel, dropping the value of the French company by as much as 5%.

Most of the Lucent issues were in its North American wireless operations and China. Part of the reason Alcatel finds the US company attractive is it footprint in North American.

Lucent revenue for the fiscal third quarter ending June 3o actually dropped by 13% to just above $2 billion.

Except for cost cuts, which can be done once, the philosphy behind the merger looks more dubious. As telco companies and wireless firms merge, the pricing pressures on their equipment suppliers is likely to increase. Alcatel may have done nearly as well competing with Lucent as with owning it.

In contrast to the poor news at Lucent, Alcatel said its sales for calender Q2 would rise 7.5%, making one wonder whether the company would like to reset the parameters of the merger.

Lucent's stock was at $3.20 on April 6, and at $3.43 on October 4, 2005. The shares now trade at $2.34 and are bound to drop today. Alcatel's shares hit $16.40 on April 6 and now trade at about $12.

There has to be some concern at Alcatel headquarter. The question is whether it will go any further than that.

Douglas A. McIntyre can be reached at He does not own securities in companies he writes about.

Powered by Blogger