Your birthday. The anniversary of a treasured event. Scoring tickets to the Dexys Midnight Runner reunion concert. Causes for celebration, each and every one, but they've got nothing on the fireworks show that broke out at Alcatel-Lucent (NYSE: ALU) yesterday.

Early Thursday, Alcatel announced a 22% rise in fourth-quarter revenues, which when married to an 8.1% "adjusted" operating margin, helped the company achieve operating profitability for the year. (You guessed it -- adjusted operating profitability, of $390 million.) Alcatel quickly shares traded up 12% at market-open, a rise that swelled into a near-26% gain by close of trading Thursday. But was the news really as good as all that?

Bull thesis
Whenever a company starts tossing the "adjusted" word around, you know this isn't because it earned an honest "net" profit. And indeed, Alcatel did end the year with a $0.20-per-share net loss. Still, the herd of bulls now pawing around Alcatel's stock, and dropping upgrades in the turf, have finally something to moo about. Alcatel did exceed analyst expectations for revenues in Q4, and for the year. Sales to U.S. customers AT&T (NYSE: T) and Verizon (NYSE: VZ) look to have been particularly strong, and the company generated more than $430 million worth of free cash flow in the fourth quarter. CEO Ben Verwaayen boasted that the momentum shown in Q4 proves Alcatel's ability to "transform into a normal company."

Bear thesis
But is this truly a new normal for Alcatel? And even if it is, is this "normal" a high enough standard to demand of the company? Bears would argue that, even allowing for adjustments, Alcatel only managed to eke out a 1.8% operating margin for the year as a whole. That may beat struggling telecom-oriented Ciena (Nasdaq: CIEN), but it's still a far cry from the 20-ish operating margins that enterprise-focused networking players F5 Networks (Nasdaq: FFIV), Juniper (Nasdaq: JNPR), and Cisco (Nasdaq: CSCO) regularly pull down. (And in case you haven't heard, this was a bad year for Cisco.)

The 1.8% also scrapes the bottom of the 1% to 5% adjusting operating margin range that Alcatel promised us a few months back. And management failed to deliver its promised breakeven free cash flow for the year -- burning more than $1.1 billion instead.

Foolish takeaway
Sure, Alcatel now promises to deliver 5% operating margins in 2011, but even this falls short of previous forecasts. When management walks back profits targets -- even weak, pro forma targets -- well, that's not ordinarily the stuff of which 25% rallies are made. I wouldn't hold out hopes of seeing this rally continue.

What do you think of the run-up at Alcatel-Lucent? Click over to Motley Fool CAPS now, and tell us what you think.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. The Motley Fool has a disclosure policy.

Juniper Networks is a Motley Fool Big Short short-sale selection. Motley Fool Alpha has opened a short position on Juniper Networks. The Fool has created a bull call spread position on Cisco Systems. Motley Fool Alpha owns shares of Cisco Systems.

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