Why Alcatel-Lucent Left Shareholders Disconnected in 2012

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2012 is now behind us, and it's a good time to look at what happened throughout the year to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.

Today, I'll look at Alcatel-Lucent (UNKNOWN: ALU.DL  ) . The telecom and networking equipment maker has struggled for years, as ongoing operating losses have burned through most of the company's cash. But will a recent boon help lift the shares further out of their downward trend? Below, you'll find more to explain what happened with shares of Alcatel-Lucent last year.

Stats on Alcatel-Lucent

Year-to-Date Stock Return


Market Cap

$3.58 billion

Revenue, Past 12 Months

$18.6 billion

Net Income, Past 12 Months

$1.1 billion*

Earnings from Continuing Operations, Past 12 Months

($208 million)

1-Year Revenue Growth


CAPS Rating (out of 5)


Source: S&P Capital IQ. *Includes earnings from discontinued operations.

What's behind Alcatel-Lucent's volatile moves in 2012?
Alcatel-Lucent has had a topsy-turvy year. Although the company saw its share of good news in 2012, it always seemed to find some bad news to offset it.

Alcatel hasn't had any shortage of interesting opportunities come its way this year. In October, the company made a deal with China Mobile (NYSE: CHL  ) to provide a piece of its trial 4G network rollout. More recently, Telefonica (NYSE: TEF  ) decided to use Alcatel's 7950 XRS network router to upgrade its Internet protocol network.

But the company has struggled to conserve cash. Throughout the year, the company has had to dodge analyst concerns that the company might have to file for bankruptcy. Moreover, despite extensive cost-cutting measures that have included layoffs, Alcatel needed a $2.1 billion credit facility from Goldman Sachs and Credit Suisse in December in order to refinance debt and reduce costs. Although that inspired a temporary boost in the stock, it's uncertain whether Alcatel will take the steps it needs in order to solve the fundamental issues facing its business.

What was clear throughout the year was that even if Alcatel can solve its immediate financial problems, its road won't automatically get any easier. Alcatel will still face cutthroat competition from Ericsson (NASDAQ: ERIC  ) as well as Nokia's (NYSE: NOK  ) joint venture with Siemens, as well as Chinese companies like Huawei.

Alcatel's 2012 didn't look great, but it closed out the year in much better shape than it was in just a month ago. The question looking forward is whether the company can finally succeed given its new financing.

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