In these waning days of 2011, there's a chill in the air and snow in the forecast. What better time of year to curl up by the fire and ponder: What went wrong with the stocks you picked back in January? What went right? And should you keep these stocks in your portfolio, or go out and find something new?

That's what we aim to do today, as we flip back the calendar, and consider the year that was at Alcatel-Lucent (NYSE: ALU).

A few Foolish facts about Alcatel-Lucent

Year-to-Date Stock Return (48%)
P/E 6.9
Dividend Yield None
1-Year Revenue Growth (1.3%)
1-Year Profit Growth N/A*
CAPS Rating (out of 5) ***

Source: Motley Fool CAPS. *Negative earnings in comparison period.

What happened to Alcatel-Lucent this year?
After a lackluster 2010, in which its shares basically churned water for 12 months straight, Alcatel-Lucent bulls emerged from the drink and stampeded into 2011. Expectations for a strong revenue year were quickly rewarded, as the company stole march after march against archrival Cisco (Nasdaq: CSCO), and racked up big sales to telecom clients AT&T (NYSE: T) and Verizon (NYSE: VZ).

Fueling the fires -- an arms race in big telco to provide better service for smartphone users, and build out TV and Internet services in a market share grab aimed directly at Comcast (Nasdaq: CMCSA) and its brother cable providers. An arms merchant to the industry, Alcatel looked flush, reporting a 22% rise in Q4 (2010) revenues early on, and collecting a big endorsement from investment banker UBS. Starting just under $3 a stub in January, the shares swiftly doubled, topping $6.50 in early May.

Then came the crash. Around July, Wall Street began to question the Alcatel growth story. First Deutsche Bank reported that the stock's rise had already captured all potential value from positive developments, while the risk of slowing "revenue and margin momentum" was growing.

And let's give credit where it's due: Deutsche Bank was dead on the money. Alcatel just finished reporting a quarter in which earnings nearly septupled ... but revenues are floundering (down 7%), and as I've been pointing out for months, Alcatel's supposed earnings are entirely lacking in the kind of real free cash flow that would make them worth paying attention to.

Unless they get this problem fixed -- and soon -- 2012 could be the year investors stop talking about how Alcatel is fixing what was broken and begin talking about ... the risk it goes broke.

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