Stop me if you've heard this before – Alcatel-Lucent (NYSE: ALU)
has a bold plan to cut costs, refocus the business, and return the
company to profits and prosperity. To be fair, the new CEO does deserve a
chance to show if his plan can/will work, and the broad strokes
outlined today make sense. Even so, this is Alcatel-Lucent and the
telecom equipment industry we're talking about, and success is far from
guaranteed.
Cut Costs, Cut Businesses
The centerpieces to the new plan are deep cost cuts and a sharp focus
on businesses where Alcatel-Lucent can compete effectively in the coming
years.
While the company had been targeting about EUR 500 million in cost cuts
by 2015, that target has been doubled. Management intends to achieve
this by increasing its direct channel focus with sales and marketing and
reducing the scope of its R&D.
That's an interesting move, particularly given how many Alcatel-Lucent
bulls try to point to the company's patent estate as a store of future
value. While it makes ample sense to reduce the scope of R&D
(translating those patents into real products and real revenue streams
has not gone well), I wonder how it will go over with shareholders.
Please continue here:
http://www.investopedia.com/stock-analysis/061913/will-new-alcatellucent-plan-lead-better-results-alu-csco-jnpr-cien-eric.aspx
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