Summary
The source article is correct in stating that, “The headline figures [for Alcatel-Lucent] are certainly encouraging.” However, the supplier still has a lot to do in trimming its businesses down. Other developments related to the company are notable as well.
Analysis
Rationalization of Alcatel-Lucent product lines appears to be still going at a slow pace and that is not helping in “shepherd[ing] the company back to health.” It is hard to compete against Cisco Systems, Juniper Networks, etc. with such negative operating margins.
While it is not approaching anything as dire as a Nortel situation, Alcatel-Lucent has to do a better job of generating cash. One is not talking about a start-up here. However, as we have discussed in the past, unless Alcatel-Lucent just focuses on markets in which it can be a clear leader, it could find itself heading in the same direction as Nortel.
The expenditure of any resources in coming up with the cutesy title of “Senior Vice President of Transformation,” is not very impressive. It is somewhat reminiscent of Nortel starting the label craze a while back that included the word, “Evangelism.”
Ex-AlcaLu executive, Mike Quigley, as Executive Chairman of the National Broadband Network Company, could find it to be an even harder challenge than was the case at the manufacturer.
Samuel Greenholtz consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
