Alcatel Lucent SA (ADR) (NYSE:ALU)’s Turnaround On Track


Dallas, Texas 12/02/2013 (Financialstrend) – There are some sure signs that Alcatel Lucent SA (ADR) (NYSE:ALU) might rejoin the CAC 40 index in France, next month. The company has been on a comeback trail and has been gaining momentum and the 2-year highs that the stock has hit is a definite indication that it is on the path to recovery. If the company eventually does get restored to the Index, it will gain approximately 225M Euros/81M shares from the index trackers is what fund managers and analysts are opining. This estimation will technically be worth an equivalent of 2 average days of volume.


About the Index

The CAC 40 benchmark came into existence 25 years ago and Alcatel Lucent SA (ADR) (NYSE:ALU) had been the founding member. It was unfortunate that the illustrious company was shown the door by the index in 2012. STMicroelectronics shares dipped 24% over a matter of 6 months and Alcatel Lucent SA (ADR) (NYSE:ALU) is positioned to take its place. The former has been struggling with a drop in demand from Asian electronics and smartphone manufacturers. The latter makes equipment that is used by the large telecom companies like AT&T Inc. (NYSE:T) and Orange.

Its downslide came when it started facing a great deal of competition from Chinese rivals who were providing low cost options. In addition there was also a drop in demand from its customers and all of this culminated in Alcatel’s dip in the market as in 2012 October , the company’s shares had touched 0.67 Euros which was a record low for it.

A breath of life

But the company’s new Chief Executive brought with him an aggressive attitude and some effective turnaround plans. The 10,000 job cuts, 1B Euros of asset sales and 1B Euros in cost saving has brought in some hope of a recovery and the company’s shares have tripled since early May.

Getting back on the CAC will give Alcatel Lucent SA (ADR) (NYSE:ALU) its lost visibility and will add credibility to the turnaround strategy that the company has embarked upon. The NYSE-Euronext index committee manages the CAC-40 and meets every quarter. The exact dates have not been finalized yet but the meeting is slated to be held next week. There are 2 specific criteria to be included on the index. The trading volume of the stock and the free-float adjusted market cap.

Alcatel Lucent SA (ADR) (NYSE:ALU) is making every effort to bounce back and  has also found a new focus point- fast broadband services and Internet Protocol networking. The company is all set to leverage the global boom in mobile devices and the race that all operators and service providers are in, to start with and expand their cloud-based services.

On Friday, Alcatel Lucent SA (ADR) (NYSE:ALU) executives put before the media and analysts their plan to “shift” and change the company from a generic supplier of telecom-equipment to an “industrial specialist”. A great deal is positioned on the anvil for the company that has been struggling for a very long time now. It had announced this “shift” plan in June and includes divestiture of $1B in assets and an aim to reach profitability by 2015.

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