A French newspaper is quoting Alcatel-Lucent's CFO as saying he expects a return to profitability by the latter part of next year.
Paul Tufano, the company's chief financial officer, was quoted in Les Echos, as saying, "Regarding net income, we expect to return to profits during 2010, most likely in the second-half of the year."
Back in December company CEO Ben Verwaayen unveiled Alcatel-Lucent's strategic plan, which called for working closely with Alcatel-Lucent's service provider, enterprise and application partners to -- as Verwaayen said -- "innovate, collaborate and partner... to stimulate a sustainable business model for the industry that will fuel innovation and the capital investment required to expand the overall web experience to more people and businesses."
At the time, company officials offered a break-even forecast in terms of operating profit in 2009.
As I wrote in the December piece:
In 2010, Alcatel-Lucent is targeting to achieve a gross margin in the mid thirties range and an operating margin in the mid single-digit range, and looking ahead to 2011, the goal of the company is to achieve a gross margin in the mid to high thirties range and an operating margin in the mid to high single-digit range.
Alcatel-Lucent received a measure of positive news from an R. W. Baird recommendation upgrade, from Neutral to Outperform. A recent Barron's article quoted the analyst team at Baird, who believe the risk/reward profile is attractive.
Alcatel-Lucent's balance sheet is probably the biggest concern for investors, but we believe its complexity has deterred investors from analyzing it in detail. Our analysis suggests the company's liquidity position is not overly concerning and balance-sheet risks may be overestimated by the market.
Alcatel's cash position is in reasonable shape and will receive a welcome injection of net cash in the second quarter when the company sells its stake in [European military-tech firm] Thales for 1.6 billion euros. Alcatel's pension obligations are sizable, currently valued at more than 10 times the company's market cap, but remain overfunded despite recent market turmoil due to the conservative allocation of plan assets. While comparisons with Nortel Networks are inevitable, and our worst-case scenario analysis suggests Alcatel could experience liquidity strains in 2011, we believe a bankruptcy or major liquidity problem is unlikely.
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