Is Alcatel-Lucent's Run-up For Real?

Your birthday. The anniversary of a treasured event. Scoring tickets to the Dexys Midnight Runner reunion concert. Causes for celebration, each and every one, but they've got nothing on the fireworks show that broke out at Alcatel-Lucent (NYSE: ALU  ) yesterday.

Early Thursday, Alcatel announced a 22% rise in fourth-quarter revenues, which when married to an 8.1% "adjusted" operating margin, helped the company achieve operating profitability for the year. (You guessed it -- adjusted operating profitability, of $390 million.) Alcatel quickly shares traded up 12% at market-open, a rise that swelled into a near-26% gain by close of trading Thursday. But was the news really as good as all that?

Bull thesis
Whenever a company starts tossing the "adjusted" word around, you know this isn't because it earned an honest "net" profit. And indeed, Alcatel did end the year with a $0.20-per-share net loss. Still, the herd of bulls now pawing around Alcatel's stock, and dropping upgrades in the turf, have finally something to moo about. Alcatel did exceed analyst expectations for revenues in Q4, and for the year. Sales to U.S. customers AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) look to have been particularly strong, and the company generated more than $430 million worth of free cash flow in the fourth quarter. CEO Ben Verwaayen boasted that the momentum shown in Q4 proves Alcatel's ability to "transform into a normal company."

Bear thesis
But is this truly a new normal for Alcatel? And even if it is, is this "normal" a high enough standard to demand of the company? Bears would argue that, even allowing for adjustments, Alcatel only managed to eke out a 1.8% operating margin for the year as a whole. That may beat struggling telecom-oriented Ciena (Nasdaq: CIEN  ) , but it's still a far cry from the 20-ish operating margins that enterprise-focused networking players F5 Networks (Nasdaq: FFIV  ) , Juniper (Nasdaq: JNPR  ) , and Cisco (Nasdaq: CSCO  ) regularly pull down. (And in case you haven't heard, this was a bad year for Cisco.)

The 1.8% also scrapes the bottom of the 1% to 5% adjusting operating margin range that Alcatel promised us a few months back. And management failed to deliver its promised breakeven free cash flow for the year -- burning more than $1.1 billion instead.

Foolish takeaway
Sure, Alcatel now promises to deliver 5% operating margins in 2011, but even this falls short of previous forecasts. When management walks back profits targets -- even weak, pro forma targets -- well, that's not ordinarily the stuff of which 25% rallies are made. I wouldn't hold out hopes of seeing this rally continue.

What do you think of the run-up at Alcatel-Lucent? Click over to Motley Fool CAPS now, and tell us what you think.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. The Motley Fool has a disclosure policy.

Juniper Networks is a Motley Fool Big Short short-sale selection. Motley Fool Alpha has opened a short position on Juniper Networks. The Fool has created a bull call spread position on Cisco Systems. Motley Fool Alpha owns shares of Cisco Systems.

Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


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Comments from our Foolish Readers

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  • Report this Comment On February 11, 2011, at 2:31 PM, DanTheMan1984 wrote:

    I think your underestimating Alcatel-Lucent and how far it has came. First of all there was a component shortage that hit all the stocks that are rleated to ALU, like Ericsson and Cisco. I think the motley fool are a bunch of fools you guys bashed ALU the last time it reported earnings at 3.23...how did that turn out? Were you guys bullish on JDSU when it was 2.00 and now is sitting at 27 per share ha? Well guess what pal I think ALU is going to do the same so sit back and enjoy the ride either get shares now while there cheap or cry later, or go by CSCO some garbage stock with a lieing CEO like John Chambers. Thats all you and Cramer do is BASH ALU looks like us shareholders are finally starting to see the post merger benefits and things in 2011 are only going to get better. And they never said 5%!!! they said at leadt 5%...they said between 5% and - 9 % thru 2011 and Mr.Verwaayen said getting close to 9% is not out of the realm of possiblilty do I think they will hit near the 9% target probally not but I bet they come in over 6%...CSCO margins have been coming down, and sorry FFIV is overrated a bit...if its so good why does it only have 3 stars on the motley fool rating system...

  • Report this Comment On February 11, 2011, at 2:35 PM, DanTheMan1984 wrote:

    Also ALcatel- Lucent said they would grow faster then the market in 2011 you leave out all the important details...you are nothing more then a basher and a fool yourself Rich (The DIck) Smith.,..HA

  • Report this Comment On February 11, 2011, at 3:17 PM, PhulishMortal wrote:

    I can't believe the major factual error in the very first paragraph of this article! What kind of tripe is this?

    It's "Dexy's Midnight Runners."

    . . . what?

  • Report this Comment On February 11, 2011, at 3:38 PM, dontgetfooled wrote:

    Did Mr. Smith have a bad experience with Lucent stock? I believe the continued (and repeated) poor press shown Alcatel-Lucent by Rich is very unprofessional. He fails to mention that Alcatel WAS a very healthy company before the Lucent merger. They should receive MAJOR credit for turning the tide, and saving a US National treasure, namely BELL LABS! (where was that darling Cisco then?) Remember who has driven most of the tech breakthroughs in the 20th century.....hello McFly...the all time biggie, the transistor. Just look at the latest innovation in cellular tech announced this week, lightRadio. Verizon & every 4G LTE site will be powered by their technologies. Please show some class and mention facts, not something to just be displayed as a Debbie Downer link over at Yahoo Finance!

  • Report this Comment On February 11, 2011, at 3:38 PM, mariocuturic wrote:

    Dantheman1984

    Dan,

    I agree with you. ALU is sitting in the sweet spot of the wireless broadband revolutionI(ie Smartphone explosion, global explosion of wireless broadband initiatives, etc.). They are poised to benefit most from the explosion in broadband traffic the above trends will go.

    I expect the shares to at least double by years end. Do you agree?

  • Report this Comment On February 11, 2011, at 4:01 PM, DanTheMan1984 wrote:

    Mario I expect the shares to triple by years end!!! Look at what Jdsu has done in the last two years!!! I think Alu could do the same

  • Report this Comment On February 11, 2011, at 6:00 PM, mariocuturic wrote:

    I found this article about Alcatel-Lucent and the future is definitely bright for this company........

    Wireless advances could mean no more cell towers

    By Peter Svensson

    Associated Press

    Posted: 02/11/2011 02:40:10 PM PST

    Updated: 02/11/2011 02:40:10 PM PST

    NEW YORK -- As cell phones have spread, so have large cell towers -- those unsightly stalks of steel topped by transmitters and other electronics that sprouted across the country over the last decade.

    Now the wireless industry is planning a future without them, or at least without many more of them. Instead, it's looking at much smaller antennas, some tiny enough to hold in a hand. These could be placed on lampposts, utility poles and buildings -- virtually anywhere with electrical and network connections.

    If the technology overcomes some hurdles, it could upend the wireless industry and offer seamless service, with fewer dead spots and faster data speeds.

    Some big names in the wireless world are set to demonstrate "small cell" technologies at the Mobile World Congress, the world's largest cell phone trade show, which starts Monday in Barcelona, Spain.

    "We see more and more towers that become bigger and bigger, with more and bigger antennas that come to obstruct our view and clutter our landscape and are simply ugly," said Wim Sweldens, president of the wireless division of Alcatel-Lucent, the French-U.S. maker of telecommunications equipment.

    "What we have realized is that we, as one of the major mobile equipment vendors, are partially if not mostly to blame for this."

    Alcatel-Lucent will be at the show to demonstrate its "lightRadio cube," a cellular antenna about the size and shape of a Rubik's cube, vastly smaller

    than the ironing-board-sized antennas that now decorate cell towers. The cube was developed at the famous Bell Labs in New Jersey, birthplace of many other inventions when it was AT&T's research center.

    In Alcatel-Lucent's vision, these little cubes could soon begin replacing conventional cell towers. Single cubes or clusters of them could be placed indoors or out and be easily hidden from view. All they need is electrical power and an optical fiber connecting them to the phone company's network.

    The cube, Sweldens said, can make the notion of a conventional cell tower "go away." Alcatel-Lucent will start trials of the cube with carriers in September. The company hopes to make it commercially available next year.

    For cell phone companies, the benefits of dividing their networks into smaller "cells," each one served by something like the cube antenna, go far beyond esthetics. Smaller cells mean vastly higher capacity for calls and data traffic.

    Instead of having all phones within a mile or two connect to the same cell tower, the traffic could be divided between several smaller cells, so there's less competition for the cell tower's attention.

    "If it is what they claim, lightRadio could be a highly disruptive force within the wireless industry," said Dan Hays, who focuses on telecommunications at consulting firm PRTM.

    Rasmus Hellberg, director of technical marketing at wireless technology developer Qualcomm, said smaller cells can boost a network's capacity tenfold, far more than can be achieved by other upgrades to wireless technology that are also in the works.

    That's sure to draw the interest of phone companies. They've already been deploying older generations of small-cell technology in areas where a lot of people gather, like airports, train stations and sports stadiums, but these are expensive and complicated to install.

    In New York City, AT&T has started creating a network of outdoor Wi-Fi hotspots, starting in Times Square and now spreading through the midtown tourist and shopping districts. Its network has been hammered by an onslaught of data-hungry iPhone users, and this is one way of moving that traffic off the cellular network.

    Smaller cells could do the same job, but for all phones, not just Wi-Fi enabled ones like the iPhone. They could also carry calls as well as data.

    San Diego-based Qualcomm will be at the Barcelona show with a live demonstration of how "heterogeneous networks" -- ones that mix big and small cells, can work. A key issue is minimizing radio interference between the two types of cells. Another hurdle is connecting the smaller cells to the bigger network through optical fiber or other high-capacity connections.

    "That's an impediment that we're seeing many operators struggling with right now as data volumes have increased," Hays said.

    LM Ericsson, the Swedish company that's the largest maker of wireless network equipment in the world, is also introducing a more compact antenna at the show, one it calls "the first stepping stone towards a heterogeneous network."

    Small cellular base stations have already penetrated hundreds of thousands of U.S. homes. Phone companies like AT&T, Verizon Wireless and Sprint Nextel have for several years been selling "femtocells," which are about the size of a Wi-Fi router and connect to the phone company's network through a home broadband connection.

    The cells project radio signals that cover a room or two, providing five bars of coverage where there might otherwise be none.

    British femtocell maker Ubiquisys will be in Barcelona to demonstrate the smallest cell yet. It's the size of a thumb and plugs into a computer's USB drive. According to Ubiquisys, the idea is that overseas travellers will plug it into their Internet-connected laptops to make calls as if they were on their home network, but there are potential problems with interference if used that way.

    According to Rupert Baines, marketing head of Picochip, a more realistic application for a tiny plug-in cell is to make it work with cable boxes or Internet routers, to convert them into femtocells.

    A key part of the "small cell" idea is to take femtocells outside the home, into larger buildings and even outdoors.

    Picochip, a British company that's the dominant maker of chips for femtocells, will be in Barcelona to talk about its chips for "public-access" femtocells, designed to serve up to 64 phone calls at a time, with a range of more than a mile. They could be used not just to ease wireless congestion in urban areas, but to fill in dead spots on the map, Baines said.

    For instance, a single femtocell could provide wireless service to a remote village, as long as there's some way to connect it to the wider network, perhaps via satellite.

    Analyst Francis Sideco of research firm iSuppli pointed out a surprising consumer benefit of smaller cells: better battery life in phones.

    When a lot of phones talk to the same tower, they all have to "shout" to make themselves heard, using more energy. With a smaller cell, phones can lower their "voices," much like group of people moving from a noisy ballroom to a smaller, quieter room.

    "Ultimately, what you end up with is a cleaner signal, with less power," Sideco said.

  • Report this Comment On February 11, 2011, at 6:09 PM, DanTheMan1984 wrote:

    Great Article Mario. Alcatel-Lucent has so much going for it right now, the lightradio is something too that could be a huge boost for the company!!! If all goes well it will start being deployed by the end of 2011 or beginning of 2012...I wouldnt sell a share of this company if I were anyone sure there may be some down days but I really think you could be looking at a 20 dollar stock sometime in 2012 hey JDSU and las vegas sands did it and then some in there share price. Alcatel-Lucent is much bigger and can grow faster then what JDSU did or Las Vegas Sands...

  • Report this Comment On February 11, 2011, at 6:12 PM, DanTheMan1984 wrote:

    Remember the company is still in its transformation journey this is year three of it the last year so things are still not 100% in order with the company and there already producing good earnings just think of what the end of 2011 will look like when Mr.Verwaayen has finished streamlining ALU's portfolio and getting things in tip top order!!! The market reacts to stocks on potential and right now Alcatel-lucent has a lot of it even the doom and gloom anylasts are impressed dont listen to the mootley fool they bashed BIDU too and the stock has risen over 1500% lol!!!

  • Report this Comment On February 11, 2011, at 8:55 PM, 40orBust wrote:

    This author should be fired or at least go out and get a real paying job. He continues to mislead the investors looking for real deep analysis and insight. Who audits these authors to see what shares they actually own or are shorting.

  • Report this Comment On February 11, 2011, at 9:27 PM, jasmin45 wrote:

    What a stupid take on ALU? The guy who wrote this truely missed the game. Pipeline baby.. look at the future deals closed, 4 bn, by ALU. You conveniently avoided that part... You will again be proved wrong on this as you were on JDSU.

    Its taking JDSU path baby..go figure...

  • Report this Comment On February 11, 2011, at 9:29 PM, jasmin45 wrote:

    Oh.. did I forget to mention new innovative 100G blistering fast optical network??? Nothing of that kind is happening on CSCO or F5 and there is a reason why CSCO is going down and ALU is going up.. if you don;t know.. ask and do not pretend.. good luck.

  • Report this Comment On February 12, 2011, at 12:44 AM, Blackbeered wrote:

    Tend to agree with the vast majority here ... the quality of the MF "insights" has deteriorated materially since 2007. Seems to have become a forum for shorts trying to cave stocks. Do you think these "authors" are just some poor saps located in Bagalore? They write so superficially.

    Anyway, I never visit the site intentionally anymore but find myself here only when dragged to it by a "news item" ... another peeve of mine ... how do MF's "opinions" become news items?

  • Report this Comment On February 12, 2011, at 1:41 PM, DanTheMan1984 wrote:

    Notice the author TMF Ditty (Rich Smith) has not written back yet on any comments here? He probally owns ALU and wants you to sell so he can even get cheaper shares the Motley Fool is known for this either that or he knows Dittly (kinda like his name DItty lol get it) Dittly Squat about whats going on with Alcatel-Lucent...

  • Report this Comment On February 12, 2011, at 5:13 PM, TMFDitty wrote:

    Sorry, "DanTheMan1984." I thought you were still ranting. What exactly would you like a response on?

    Whether I think Alcatel-Lucent shares will double (or was it triple?) on the say-so of a handful of anonymous posters who have no record to speak of -- lacking so much as a single CAPS pick to their credit?

    Response: Not likely.

    Whether I own Alcatel-Lucent?

    Response: Read the Fool disclosure policy.

    Whether I live in Bangalore?

    Response: Read my Fool profile.

    Whether I am willing to change my mind on Alcatel-Lucent?

    Response: Sure, I'll keep an open mind, and a close watch on the numbers. But it's going to take Alcatel-Lucent producing real (not "adjusted") profits to convince me.

    Focusing on free cash flow, and the market cap it's priced at, has me outperforming 99% of investors ranked on CAPS for four years running. I see no reason to change a strategy that works this well.

    Foolish best,

    TMFDitty

    http://caps.fool.com/ViewPlayer.aspx?t=01002844399633209838

  • Report this Comment On February 13, 2011, at 7:23 AM, nmk2011 wrote:

    But TMFDitty I have seen most companies where there has been a merger of equals report adjusted earnings for correctly guaging the financial results. And ALU is doing it because of huge merger of lucent 4 years ago. The mergers generate goodwill that needs to be amortised over a certain period of time and thats just a non cash charge to P&L. But the GAAP still requires you to amortiose the charge.

    I think most important factors to see in ALU going forward would be the top line growth and gross margins

    growth and indeed the operating and free cashflow generation.

    So don't go by GAAP earnings for companies like ALU or Boston scientific or any other company that acquired a company which is relatively big compared to the size of the acquirer. Because it will result in pretty big charges of goodwill to P&L.

  • Report this Comment On February 13, 2011, at 12:43 PM, jasmin45 wrote:

    Unfortunately Mr Ditty doesn't understand that mnk2011. He also does not understand that MTM standards here in US has thrown out of the window and if we force all the companies here to MTM, they wouldn't be worth as much they look like now.

    Most reported adjusted profit when merger or take over is involved... well who cares right mr. ditty?

    Ditty.. your poor insights are laughable... thank god that you are at fool.

  • Report this Comment On February 13, 2011, at 2:11 PM, TMFDitty wrote:

    @nmk2011: Agreed. Like I said, free cash flow is key to how I look at companies. But in fact, Alcatel-Lucent burned $1.1 billion in FCF last year (after promising to breakeven.)

    It's promising this year to try to break even again. Maybe it will, maybe it won't. What we know today is that factually, even four years after the "huge merger of lucent 4 years ago" that you mention, the company is still burning cash.

    TMFDitty

  • Report this Comment On February 14, 2011, at 11:29 AM, mariocuturic wrote:

    Alcatel-Lucent Profit Boosts Shares, Gives Verwaayen Credibility

    By Matthew Campbell - Feb 10, 2011 6:16 AM ET Tweet inShare.0More

    Business ExchangeBuzz up!DiggPrint Email .Alcatel-Lucent SA beat analyst estimates for fourth-quarter profit, fueling the biggest jump in its shares in 18 months and restoring Chief Executive Officer Ben Verwaayen’s credibility as a turnaround artist.

    France’s largest phone-equipment maker reported net income adjusted for some items at 385 million euros ($527 million), exceeding a 236 million-euro estimate of analysts in a Bloomberg survey. The results help put Verwaayen, who became CEO in 2008, on course to making the company consistently profitable by the end of this year, reversing losses since the 2006 merger of France’s Alcatel and the U.S.’s Lucent Technologies.

    “They have topped low expectations,” Mirko Maier, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, said by phone. “The CEO has met his target of being profitable, and that should improve confidence in the company.”

    Alcatel shares surged as much as 15 percent in Paris, and traded 14 percent higher at 3.04 euros as of 12:14 p.m. A revival in orders from phone operators beefing up networks to meet demand from the popularity of data-hungry devices such as Apple Inc.’s iPad is helping Verwaayen’s recovery plan. Network revenue led the Paris-based company’s business units, with a 32 percent fourth-quarter rise to 2.95 billion euros.

    Alcatel is targeting a “significant increase in profitability” this year, with an adjusted operating margin above 5 percent of sales, it said in a statement today.

    Alcatel has lost money in all but four quarters since the merger. Verwaayen, 58, the former CEO of Britain’s BT Group Plc, was brought in after the company lost about 5.5 billion euros in the quarters following its merger.

    Turnaround Record

    Verwaayen has pledged under his turnaround plan to make Alcatel a “normal company” by the end of this year.

    During Verwaayen’s time as head of BT, profit almost doubled, from 995 million pounds ($1.6 billion) in 2002, the year he took over, to 1.74 billion pounds in 2008.

    His efforts to turn Alcatel around come in the face of intensifying competition from both traditional European companies such as Ericsson AB and newer Asian rivals such as Huawei Technologies Co.

    Alcatel “now appears much more credible” as a rebounding company poised to gain from growth in the telecommunications markets this year, WestLB analyst Thomas Langer said in a note.

    The company has won contracts for so-called fourth- generation wireless technology from mobile operators including AT&T Inc. and Verizon Wireless.

    A shortage of basic components such as transistors hammered Alcatel’s financial results early last year, with a first- quarter loss double analysts’ estimates.

    The component situation has now “improved dramatically, and we don’t see any issue in terms of being able to meet demand,” Chief Financial Officer Paul Tufano said on a conference call with reporters today.

    Spending to rebuild inventories left the company with a negative free cash flow of 818 million euros for the full year, though it is still targeting positive cash flow this year, Tufano added.

  • Report this Comment On February 14, 2011, at 9:26 PM, Jade007G wrote:

    Finally Jim Cramer is on board with ALU. So soon the people will be stampeding into the stock !!

  • Report this Comment On February 16, 2011, at 2:01 PM, Netteligent09 wrote:

    ALU has a great product porfolio, technological advantages, and undervalue. When it comes to execution, ALU failed to capitalize on its strengths.

    Disclosure: I owned ALU stocks as personal investment for more than 2 years.

  • Report this Comment On February 16, 2011, at 10:24 PM, DanTheMan1984 wrote:

    Hey Author, how are you liking Alcatel-Lucent's run up now? Whats that I hear another 40 cents from when your written this article!! Hahahah yes.

    Lets get some facts straight here:

    1. Managment said after 3rd Quarter results in 2010 that the company would not break even on cash flow as hoped because of the component shortage this was widely known, so why you keep hampering on that point is beyond me?

    Funny how you try and hold ALU managment up to there promsies but not Cisco? Didn't Cisco's CEO Chambers 3 quarters ago tell us everything was fine with the company? Dosent seem that way to me, they have trimmed there outlook gross margins have come down and there future looks like competition is creeping in on them...but yet you right all these great things about Cisco, and here folks is a guy who claims hes a 99% better picker then the rest of the fools at mootley fool...LOL Lets See Cisco is in the red in so far this year pretty big...While Alcatel-Lucent is one of the best stocks in the S&P 500 up 65% year to date....Alcatel-Lucent has more going for it then Cisco Pal!!!!

    SO folks dont listen to this guy and his bs, and just because it says on this page you dont own Alcatel-Lucent in a disclosure statment dosent mean you actually do or dont own it!! What is the mootley fool the official portfolio keeper or something?? So Until I saw your portfolio I think you might own it...

    Oh and another point Mr. Free Cash Flow.

    If Cash Flow was so important why is the king of cash flow Microsoft such a dead stock? I guess you would consider that stock great right since they make a net profit in 2010 of 18 billion on sales of 65 billion then please tell me why that stock dont move?? You see its more then about cash flow its about potential and whats in the pipeline of products and Alcatel-Lucent has just that!!! The Market no more trades on fundamentals like Cash Flow you sir need to wise up!!!!

    if it was about fundamnetals a stock like priceline.com who does not even do 2 billion in sales annualy would not trade at 350 per share while Microsoft cant touch 30 per share!! LOL.

    Oh like you said by the way AlU produced some 430 million free cash flow in the quarter not bad for a company thats just starting to come into things theres more to follow here folks!!!

    SO there you have it folks this aouthor has been exposed for who he is, citing all this bs that means nothing...

    Oh and by the way even without the Adjusted Operating margin of 8.1% Alcatel-Lucent still would have beat the street in earnings!!!!

  • Report this Comment On February 16, 2011, at 10:28 PM, DanTheMan1984 wrote:

    Oh and another thing you got wrong you wrote "the company this year again promises to break even in cash flow" Actually Managment and the CFO Mr. Tufano said the company would have free positive cash flow for 2011 not break even!!! YOu obviously have done very little research into Alcatel-Lucent....

  • Report this Comment On April 23, 2011, at 12:47 PM, DanTheMan1984 wrote:

    Hey Rich How do you like ALU now??? LOL. Best stock in the S&P 500 this year up well over 100% YTD, oh and theres more to come esepcially when you shorts are going to be caught with your pants down...oh and cisco is crap!!!!!!!!!!!!!

  • Report this Comment On May 04, 2011, at 10:41 PM, goqqq wrote:

    Bigger picture - you don't really want to be in any part of telecom market where you have to compete every day against Huawei and ZTE. It won't take long until all the margin is sucked out of your business. This board seems to be filled with momentum players, who see a rising stock price and assume the underlying business must be sound. TMFRich is getting jumped for simply reporting unpleasant financial facts. Stock prices can float up and stay at unreasonably high levels for years based on nothing more than hope. But eventually the stock price will reflect the reality of margin and margin growth potential in the underlying business. Competing head to head against the Chinese in standardized commoditized telecom space is a loser business in the long run. Chinese have caught up to Cisco and Ericsson and ALU and are going to take down the old guard box vendors. They can innovate better, faster, with higher quality, and lower cost. Everything that Cisco and Ericsson and ALU builds has a bulls-eye on it. The global revenue potential is big enough to make it worthwhile for the Chinese to develop and exploit.

    Margin and growth potential for telecom equipment providers will be restricted to the niche to mid-tier players, where proprietary technology is acceptable to an operator. Competing head to head against Huawei or ZTE in telecom is like trying to compete against Southwest, except the Chinese companies dont need to make a profit every quarter - they are not public and can get financing infusion from Chinese military/government whenever needed.

    Motorola infrastructure group is going down the tubes, will never recover to former dominance. Nortel went bankrupt. Nokia-Siemens desperately trying to find a way to gracefully get out of telecom infrastructure space. Alcatel and Lucent combined and are still working to get solid footing as a single company and not a collection of bits and pieces. Lots of creative destruction ala Schumpeter.

    The difference in telecom equipment is the rapidly rising new global superstars are Chinese, and the innovation they have found that cannot be duplicated by ALU or Ericsson or Cisco is ready access to infinite source of zero cost financing. It will take ten more years for the end game to play out, but the end game is already obvious, if you are selling any kind of standardized telecom equipment, that doesn't have value as a consumer brand.

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