Why Alcatel-Lucent Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of networking gear maker Alcatel-Lucent (NYSE: ALU  ) surged 13% today after its quarterly results and outlook topped Wall Street expectations.

So what: Alcatel has been trying to reorganize over the past several months, and today's Q3 results -- narrower-than-expected loss of 200 million euros on a 7% revenue increase -- suggest that management's turnaround plan is rapidly gaining traction. In fact, gross margins during the quarter increased 480 basis points to 32.6%, giving analysts plenty of good vibes over its competitive position and cost-cutting initiatives going forward.

Now what: Looking ahead, management sees strong seasonal activity in Q4 and expects to save up to 300 million euros in fixed costs for the full year. "We are seeing the first positive signs of our new operating model in our day-to-day business and are encouraged by the substantial progress in the Shift Plan key metrics," CEO Michel Combes said. "Going forward, we remain fully focused on execution to leverage the momentum we are building." With the stock now up about 280% over its 52-week lows, however, I'd wait for some of the exuberance to fade before buying into that bullishness.

More tasty tech picks
Our top technology analyst recently infiltrated one of Wall Street's most exclusive gatherings... and left with three incredible investment opportunities, straight from the CEOs. These are profit-building strategies Main Street isn't meant to hear about -- so you must act now before someone shuts us up. Click if you want "industry insider" earnings -- NOW!


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2707875, ~/Articles/ArticleHandler.aspx, 7/23/2014 4:36:32 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement