It's certainly not a news flash that 2012 -- at least through its first three quarters -- has not been good for U.S.-French telecommunications equipment maker Alcatel-Lucent (NYSE: ALU). Discouraging enough that its revenues slipped 7.4% for the first nine months of the year compared to the same period in 2011, but downright disturbing that the company's gross profits plummeted -- 21%.

And plummet, too, did the stock -- from a high of $6.54 per share in April of 2011, to a dribbling $1.35 the morning of the last day of this year.

For those Alcatel-Lucent shareholders still holding on, and for those thinking about buying in at what might be a bargain price, the question is: Can the company pull out of its tailspin and regain its place as a telecom innovator?

The company's answer
As expected from any CEO, company head Ben Verwaayen did his best at painting an optimistic -- though guarded -- picture of his company's future during the third quarter earnings call last November.

According to Verwaayen, the company must meet three important objectives.

1. Widen margins
First and foremost, he said, was improving gross and operating margins.

By the end of 2013, the company must achieve cost reductions of at least $1.65 billion. To that end, Alcatel announced last summer it would lay off 5,500 workers. Verwaayen said that 60% of those heads would come from SG&A -- selling, general, and administrative positions -- and the majority of those would be from Europe, not from "the territories where it's easy to adjust your headcount."

A major sticking point with that is it will be trickier and more costly to do a personnel reduction in Europe, where there are more regulatory and legal hurdles to clear than in much of the world.

Alcatel's executive population would also get a good thinning out, according to Verwaayen. That group will be reduced by 30%, and two organizational layers will disappear.

Along with the cost reductions, Alcatel plans to make a greater effort to monetize its trove of 29,000 patents. It has contracted with patent management company RPX (RPXC) to help achieve that. Analysts had expected that deal to bring in up to $1.3 billion. That hasn't happened, and Verwaayen said his company would be shopping the patents more aggressively itself, dealing with some potential patent licensers directly.

2. Stick with research and development
Verwaayen said his company greatest strength and core value was as an "R&D innovation company." With the change away from 3G to 4G LTE, and also toward the emerging "small cell" (also known as "mini base station") technology -- a trend growing in the U.S. wireless market -- Verwaayen believes his company is in a good position to stay on the leading edge of wireless technology.

The company took a major stride in the small-cell field when Sprint Nextel (S) announced last summer it had arranged with Alcatel to install its LightRadio Metro Cells in densely populated areas to augment the carrier's LTE capacity. The small-cell base stations can be mounted on street lamps and don't need to be placed in large towers, allowing them to be placed almost anywhere.

The company told Reuters last October it would protect its 26,000 R&D staff members from cuts.

3. Improve the balance sheet
At the end of the third quarter, Alcatel-Lucent had $3.56 billion in cash, cash equivalents, and marketable securities, and $3 billion in long-term debt, including bonds and notes.

The company needed to improve its cash buffer and refinance some of its debt that would be maturing in two or three years. Earlier this month it did that by securing $2.12 billion in new financing from Credit Suisse and Goldman Sachs. This new loan will mature in 3.5 to six years.

Verwaayen said in a statement at the time that this money will help in its cost-cutting.

Under advisement
Alcatel-Lucent has a bit more breathing room now with its new financing, but will be enough to pull itself out of the mire in only one year -- if at all? Perhaps a better question might be, can it be the comeback kid of 2014?