Bracing for Lucent-Alcatel Earnings (ALU)

Telecom & Wireless

Published: May 10, 2007 6:23 pm

Alcatel-Lucent (ALU-NYSE) will have reported earnings most likely by the time most of us are half way through our sleeping in the US on Friday morning. As a reminder they gave us guidance at 2:25 AM EST back on April 24th that was under expectations. The company said it would have soft revenues at around 3.9 Billion Euros, down 8% on a constant currency rate. It also forecast a 260 million Euro loss, half of which was on items. What kept the stock higher was that it gave a book-to-bill ratio of 1.3 at the end of the quarter. If they can capitalize off that then that will be a stabilization.

So, forget about the current earnings numbers and go straight doiwn to the company’s guidance in the press release. Don’t forget to back out a 780 million Euro gain from te sale of a Thales transaction, so if you see that the company posted a 500 million Euro earnings number in the headline you don’t have to be fooled. If it does not show at least some hope of better revenues on that 1.3 book-to-bill ratio then there may be some selling.

Jon C. Ogg
May 10, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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