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Alcatel-Lucent Message Board

  • winnie_wong_88 winnie_wong_88 Feb 9, 2006 9:11 AM Flag

    Anyone voting Yes?

    to the proxy papers on managment and for the reverse split that was mailed to us shareholder's? I think Wed shareholder's meeting will get really ugly...

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    • No one with at least half a brain would vote for a reverse split.

      rick425310, others including myself have been very vocal on why a reverse split for LU is a very dumb idea.

      Ignore for a moment the LU BOD has not gotten anything right and you are entrusting them to make a decision which results in failure 63.3+%

      Ignore for a moment the fact that most companies which go reverse split do so because they have no other means of getting their stock price up.

      Also ignore for a moment that CSCO a rival in the space has 2 Billion more shares outstanding than LU and CEO Chambers is not begging like LU for a reverse split (successful growing companies don't have to),

      The Cisco example pretty much wipes out the BOD stupid argument "to reduce the number of shares outstanding" while they continue to hand out options to execs like toilet paper.

      The literature is out there if you want to search on reverse splits.

      The stat of 63.3% of reverse splits "fail or do no good" came from a Forbes Article written in 2002.

      The common denominator for companies performing a r/s which "fail or do no good" is lack of growth. LU is a 6% or less grower and would fit nicely into this rubric of fail or do no good.

      Good Article entitled BUYOUTS, BUYBACKS & SPLITS By Sara-Louise Boyes Corporate Finance
      April 2001, Pgs. 25-27 which says repurchasing of shares for companies with the cash is preferable to doing a reverse split:

      Look at LUs balance sheet under Capital Surplus. There is 23.5 Billion there they could use - they only need to use about 7B of the 23.5B to buy back 2.5B shrs stock on the cheap if they had faith in this Company's future.

      MSN article by Michael Brush:

      The wretched truth about reverse stock splits

      These desperation moves -- bundling shares for sale at a higher price -- rarely lift faltering stocks for long. Odds are better for short-sellers. Here�s what to keep in mind...

      Pay attention, because these desperation plays, known as reverse stock splits, can signal sharp declines ahead that could wipe out a good part of your wealth.

      Good Cnet business news article:

      "Since it's done for purely cosmetic reasons and doesn't change a company's finances, the market knows it and the company gets penalized. Most companies end up seeing their stock prices continue to slide," said Pamela Peterson, a finance professor at Florida State University and co-author of a 1992 research report, "A further understanding of stock distribution: The case of reverse stock splits."

      **********************

      If that does not satisfy you search using "reverse split" there is an exhaustive study done by someone out of New Orleans with references: 1801768 is the pdf

      You can view in pdf or html form

      The conclusion is on page 17 :

      Our results indicate that the market does not view reverse splits favorably and that reverse
      splits appear only to delay the inevitable delisting of many sample firms, in the absence of other corrective governance events.

    • Indeed this meeting ain't going to be pretty. They better reinforce their security that day. If LU has been incapable of bringing its stock up don't count on a reverse to do it. It just don't make sense.

    • winnie.......crawl back in your cave. the revserve split is old old news and everybody who has any sense at all has known for a long time that its going to happen...and without adverse consequence to the stock.

      go preach your doom and gloom on another board.

    • I doubt it..they met bottomline guidance of 4 cents despite missing the topline by 400M...analysts have raised 06 bottomline estimates to reflect improved profitability...the shortfall at the topline is the result no budget flush from customers...which they could not have anticipated...their guidance for the rest of the year is solid...especially the last half of the year...

      go ahead and vote....you are wasting your time...as it does not count...do the math...with 4.4B shares, even voting many times the combined shares of all at this board would still mean nothing...

      Why?

      Because sophisticated investors realize that LU was on the verge of BK a few years ago...at 60 cents a share....losing 29B dollars over a few year period, then turned the company around with 9 or 10 straight Qs of profitability, with ever declining reliance upon pension credits..this year they will make 600+ million, eaily, not withstanding the charge, and next year nearly a billion in profits...again, with less and less reliance upon pension credits...

      the focus should be on revenue and profitability going forward, not the stock price....because if LU is not profitable, its stock price cannot rise...

      so the difference really is that someone (NOT YOU) who took the time to do their DD would realize that LU is a longterm play, and if it took longer than they thought to turn a profit they (NOT YOU) would not whine on a meaningless message board, and they (NOT YOU) would not believe for a moment that voting their shares would impact results....

      Russo does need to go...but not because she has not done her job...but because she is too timid to make bold moves to restore LU to greater profitability...

    • the more brutal the better!

 
ALU
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