Megamergers are never easy, and border-spanning multinational deals can be even tougher. Nonetheless, it seems that the $13.4 billion combination of Alcatel-Lucent (NYSE:ALU) is finally showing signs of progress.
Last Friday, the French-American firm reported that its Q1 revenue sank 12.4% to $5.25 billion. It posted 199 million euro, or $269 million, in profit, compared to 306 million euro in the year-ago period, as the uncertainty surrounding its merger allowed competitors such as LM Ericsson (NASDAQ:ERIC) to swoop in and snatch away some key deals.
Still, Alcatel-Lucent has worked hard on its merger integration, working out the kinks with employees, customers, and partners. It's also crafting a more streamlined organization model and new product road maps.
Signs suggest that sales momentum may be revving up. Alcatel-Lucent recently scored a $6 billion deal with Verizon (NYSE:VZ) to boost the speed and capacity of its wireless platform. It's also landed crucial contracts with China Mobile, Telstra, Sprint Nextel (NYSE:S), and E-Plus Mobilfunk.
Going into Q3, Alcatel-Lucent expects a healthy 10% sequential increase in revenue. For the full year, the company forecasts a 4% to 6% rise in the top line.
Alcatel-Lucent should also benefit from workforce reduction, as well as savings from changes in R&D, information technology, and procurement. In the full fiscal year, the company expects these efforts to save approximately $811 million.
Alcatel-Lucent seems springloaded for top- and bottom-line growth in the second half of this year. Investors are taking note; the stock price has spiked 18% since late March, and the shares' momentum shows no signs of slowing.
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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 2,073 out of 28,740 in CAPS. The Fool has a disclosure policy.
