Will Alcatel-Lucent announce killing off its WiMAX division this Friday?

By Brad Reese on Wed, 12/10/08 - 11:19pm.

In his research note to yours truly today, RBC Capital Markets Managing Director - Mark Sue said Alcatel-Lucent this Friday could be announcing some strategic changes, including killing off its WiMAX division, reducing spend on parts of its wireless business - such as CDMA - and making some layoffs.

According to Sue, Alcatel-Lucent could make an announcement this Friday that may include:

"Wi-Max to get Ax.

Sue's justification, "Mobile Wi-max is still futurama stuff in our view and the high investments required may not justify the market potential, which by all measures are still the planned intentions of challenged carriers Sprint and Clearwire.

"Alcatel's WCDMA segment needs major changes although we might not get it this Friday. Alcatel-Lucent may be considering a partnership with either Ericsson or Huawei so the company can rid itself of this resource heavy unprofitable business. Cooperative competition may be better than an outright sale of the business and a deal may go a long way to placate key wireless customer ATT."

Sue added, "Continuing with what it's been doing is no longer an option for Alcatel-Lucent, which has struggled with a loss in seven out of the last eight quarters. Unlike some views we don't think Alcatel will write off its CDMA business as doing so may overly offend Verizon and limit any chance of Alcatel participating in future LTE upgrades. Instead, Alcatel may announce a sharp reduction in investment in this mature technology which may decline by ~-20% next year. Alcatel may likewise keep its GSM portfolio which is mature yet profitable."

Sue concluded, "Services remain a bright spot and we expect Alcatel to redouble its efforts in this profitable business segment. Alcatel may announce a headcount reduction of ~5% of its global work force while further redistributing its headcount to lower cost regions, further plans necessary for the company to reach break-even by the end of 2009.

"Growing the business means first pruning the portfolio, a difficult yet necessary action for Alcatel-Lucent. While risks remain; encouraged new CEO and new CFO are striving to rethink the business."

Alcatel-Lucent Stock Price Chart

View the full ALU chart at Wikinvest

Alcatel-Lucent cuts jobs, focuses attention on three sectors

Do you think it would be a wise move for Alcatel-Lucent to kill off its WiMAX division?

BradReese.Com Cisco Refurbished

Quotes on New Cisco Equipment

One year warranty on refurbished:

Cisco Aironet

Cisco Power Supplies

Cisco VoIP Gateways

One year warranty Refurbished Cisco


	Cisco's new consumer push: It seems to me I've heard that song before
	New open-source router appliance ups ante in competition with Cisco
	Cisco scrap turned into $100M gold mine
	Cisco Russia financed more than $700 million in sales
	CCIE Voice and Cisco employee - Brad Cooper: Arrested and charged with first-degree murder
	Brad Reese on Cisco Story Archives