So telecom equipment maker Alcatel-Lucent (NYSE:ALU) did what it was supposed to do in the fourth quarter. But that's not good enough.

"We did what we said we were going to do," said CEO Ben Verwaayen. "I am encouraged by our operating performance, measured by our ability to achieve our top-line, operating margin and cash flow targets." Those are all noble goals, and Fools especially appreciate management that puts a premium on generating cash.

But those targets were set awfully low. Let's review the "encouraging" performance:

  • Sales came in at $6.4 billion. After the fourth-quarter sales haul, the company saw sales drop 4.5% for the full fiscal year. The decline was within the guidance range of "low to mid single digits" sinkage for the year.
  • A 6% operating margin in the fourth quarter propped up the full-year figure to 2.7%. Within the "low to mid single digits" margin target, but at the low end of an uninspiring goal.
  • That "cash flow" target was really a debt reduction goal, and Alcatel did indeed pay down a bit of its outstanding loans.

Those targets have been known since the last report, and investors have punished the stock for setting the bar at ankle-level. In the last three months, an S&P 500 SPDR (AMEX:SPY) would have set you back by roughly 6%, while Alcatel lost 31% of its value. Oh, and a goodwill writedown of roughly $5 billion led to a net loss of $2.39 per depositary share. And the new guidance isn't any more ambitious than the old one, predicting an 8% to 12% sales drop in the telecommunications market across the whole industry, which would lead to "adjusted operating profit around break-even" in 2009.

On the bright side, the company actually did produce cash flow from operating activities to the tune of $686 million this quarter. There's also a comfy cash and marketable securities cushion of $5.9 billion to keep Alcatel from meeting Nortel's (NYSE:NT) grim fate.

But this company is still not keeping Cisco Systems' (NASDAQ:CSCO) networking division awake at night, and Ericsson (NASDAQ:ERIC) is still the undisputed king of telecom infrastructure. The trans-Atlantic merger of American high-tech and French market reach was supposed to create an unstoppable juggernaut, but I'm not going to worry about a company that is happy with near-breakeven operating margins. There are so many other tastier tarts out there.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.