Alcatel-Lucent (ADR) (ALU)

leohaas (99.90) Submitted: 1/24/07 3:33 PM : Start Price: $12.86 ALU Score: 43.79

To make good on a promise I made just before the Alcatel-Lucent merger (I had an underperform rating on LU), I am picking ALU to underperform. Yesterday's disappointing announcement reminded me. See http://yahoo.businessweek.com/globalbiz/content/jan2007/gb20....
Let's recap why ALU is going to underperform. In short, this is a struggling company in a struggling industry. Telecom has not recovered from its boom and bust. Many of my ex-colleagues have fled from it. They are now Real Estate Agents, run a day-care center, retired early, or unemployed. In this slumping industry, ALU will not do well because research is cut to the bone (no great products in the pipe line), the company still has way too many managers (I personally know a few who have nobody reporting to them), and is being led by Pat Russo (Check this out: http://www.youtube.com/watch?v=iIUPItnMOSQ), who is leading a French company without being fluent in french! After the latest miss the number of people to be laid off is rumored to be 12,000, rather than the 9,000 announced. Guess what that is doing to employee morale, which is already low because of all earlier disappointments.
Disclosure: I am one of the countless laid-off worker bees at LU.

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