If you thought things were ever dicey at Cisco Systems, Inc. (NASDAQ: CSCO), the woes happening at Alcatel-Lucent SA (NYSE: ALU) are just atrocious. The sad thing to see is that what is left of Lucent and Bell Labs is being consumed from within now that the parent company is French. Europe is turning out to be a black hole with very few ships being able to escape the event horizon. Today’s sales and earnings warning says it all.

The telecom and networking equipment provider warned a week or so ahead of its formal earnings report that its adjusted operating loss will be about 40 million euro, or close to 50 million U.S. dollars, for the second quarter. Revenues are expected to be about 3.5 billion euro versus 3.9 billion a year ago.

We recently warned of a growing dividend bubble that is beginning to take hold in key telecom providers like AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). Perhaps their slowing cap-ex plans may help them keep their earnings up internally on the bottom line. Lower cap-ex does not help equipment providers like Alcatel.

Alcatel-Lucent is blaming the poor economy, but it is somehow maintaining that it expects a pick-up for the rest of the year. That will not help it meet 2012 annual targets unfortunately, and ditto for that 3.9% operating margin in 2011 that it was supposed to improve upon.

Here is how bad things are. The prior 52-week range was $1.36 to $5.27 and yesterday’s ADR trading in New York closed at $1.37. Now shares are down a whopping 17% at $1.135 in New York trading for its ADRs. In the first ten minutes of trading, we have seen well under 10 million shares trade hands.

If you go to trading in Paris, it is much more exaggerated. Shares are down more than 18% and under the 1.00 euro mark at 0.925. Its average volume is 30 million shares in Paris, and we have seen more than 100 million shares trade locally in Paris.

Alcatel-Lucent has finally broken the 1.00 euro mark locally, and now the question is whether it will break a buck in New York ADR trading. Yahoo! Finance lists the market cap as a mere 2.1 billion euro, but 3.1 billion in the U.S. One of those is not accurate, but either way this pig of a tech company is trading as though its future is not just bleak. Its future looks questionable.

JON C. OGG

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