Restructuring The Business Could Unlock Meaningful Value For Fujitsu

As I wrote about Fujifilm (OTCPK:FUJIY) last week, that company is a relatively rare example of a Japanese conglomerate that has moved reasonably quickly to transform itself in response to changing market realities. If Fujifilm is the "after" picture, Fujitsu (OTCPK:FJTSY) is more like the "before" picture, as weak profitability in its manufactured products continues to weigh down the margin and cash generation potential of its more competitive services operations. Fortunately, management is not blind to these realities and has already initiated a process to transform the business away from its legacy hardware operations.

As of now, the Street isn't buying the notion that Fujitsu will move itself away from low-to-no profit businesses like PCs, phones, servers, and chips and re-base itself around IT services. Even though I believe the business restructuring efforts will likely lead to no net long-term revenue growth (as growth in the IT services business is canceled out by sales and divestments), I think lifting the burden of these lower-margin businesses will allow for FCF margins to improve into the low-to-mid single digits, supporting a fair value more than 25% higher than today's price.

Readers should note that Fujitsu's ADRs are not particularly liquid. With that said, I would suggest investors consider buying the Japanese shares (6702.T); most of the better brokers now support international trading and the hassle/costs are not too onerous.

Read more here:
Restructuring The Business Could Unlock Meaningful Value For Fujitsu

Investopedia: NCR Transforming, But The Street Seems Up To Speed

NCR (NYSE:NCR) has already gone a long way toward transforming itself from a tired, slow-growing manufacturer of ATM and point of sale (POS) hardware to a more dynamic payments technology company. In addition to addressing client needs for more front-end productivity, NCR has really augmented its faster-growing software and service operations. The only downside to the story is valuation, as today's valuation already assumes that these moves will meaningfully upgrade the company's future cash flows.

Please read more here:
http://www.investopedia.com/stock-analysis/082013/ncr-transforming-street-seems-speed-ncr-dbd-ibm-pay.aspx

Seeking Alpha: Alcatel-Lucent: Still Building On Loose Sand

Waiting for a true, sustained recovery in carrier spending is starting to feel like waiting for Godot. Although there have been a few bright spots this quarter, Juniper (JNPR) and Ericsson (ERIC), even those are "yeah, but..." stories. With Alcatel-Lucent (ALU) it's even worse, as the company is falling short not only in sales, but may also be losing hard-won margin leverage.

Read more here:
Alcatel-Lucent: Still Building On Loose Sand

Has Ingenico Done VeriFone A Favor?

VeriFone (NYSE:PAY) is a curious company. It is about to operate in a duopoly that arguably should not exist - who would have thought that there would be just two providers of electronic payment solutions for credit, debit and gift card transactions? It also happens to carry a rather rich multiple. 

What makes the situation even more interesting today is that its sole pure-play rival may have inadvertently done the company a major favor. If rumors and numerous press accounts are accurate, Ingenico (perhaps under some pressure from the French government) rejected a buyout bid from American conglomerate Danaher (NYSE:DHR).    

The Deal That Wasn't 

According to those same sources, Danaher offered $1.9 billion, or about 28 euros per share, for Ingenico. Although that deal would not have represented much of a premium to the stock's recent trading price, these shares were below 16 euros before the summer began. Then again, a $1.9 billion bid would not represent all that much of a premium in terms of multiples either. Based on analyst expectations, that deal would represent only 1.6 times sales and less than 10 times EBITDA - relatively meager given that VeriFone trades at approximately twice those multiples.

    
Not Just About the Money? 
If reports are to be believed, it was not just the valuation of the deal that was an issue. Apparently, the French government sees Ingenico as some sort of "essential" company to France's electronics industry and is not willing to see a foreign company acquire it.

Please click below for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Has-Ingenico-Done-VeriFone-A-Favor-PAY-DHR-NCR-NVS-SNY-GDF-KKR1223.aspx