but much more important is to decide where the knife should be aplicated without risking future potential and that was what Nokia coulden´t afford to do. ALU could and also waited until spending picks up to decide if and what to get rid of, with less risking. It was obv. important first to wait for the strategical shifting and upgrade decisions of the global telcos (which are very different to eachother) and only thereafter to estimate the future rentability of different branches. Mr. Verwaayen has spent four years doing best job and shaping the products competitiveness, now is the turn and speciality of Mr. Combs with more than 20 years experience in the telecommunications field and/or addressing financial transformations to look to deliver sustainable profitability to the company inctuding necessary cuts at the right place and right time.
People like Rumors_T are thinking that you have to be a genious to cut hadcounts.... or you failed if you don´t mach the number...LOL.... but that is just secondary and the best evidence for his naivity!! Much more strategical is the timing waiting to find the answuer to the future reality. SO ALU DID THE BEST JOB AND NOKIA IST JUST TOO LATE AND attenuated at the plate!
Sentiment: Strong Buy
Yes. Mr. Ben have lost more than 50% of shareholder value. Probably, you are a shareholder since 6 months ago. In what concerns Mr. Combes experience, we will see by the end of this year, or 6 months at the helm of ALU. I hope he will make it right. But I prefer a merger with NSN, with Mr. Suri as CEO.
Rumors has been lying to us all along that,
“THE COMBINED NET RESULT OF THE CURRENT RESTRUCTURING PLAN, OVER THE PERIOD OF 2013 AND 2014, IS FOR A CONSENSUS LOSS OF $277M....WITH 2014 ALONE COMING IN AT A LAUGHABLE 1 CENT PER SHARE PROFIT, OR $23M...."
That is a blatant lie.
In fact, the consensus is $0.04 per share on average for 2013 based on restructuring alone with the low at -$0.34 to the high of +$0.23 per share. The earnings are expected to increase much higher if service providers increase their capital spending and we now know that will be the case since both AT&T and VZ have announced increase in their capital spending during 2013. This means, ALU will have great earnings in 2013 benefiting from the increases in US carrier spending and from the cost saving of its restructuring efforts.
[For 2013, we project earnings of €0.09 ($0.11) per share on revenues of €14.2 billion ($18.18 billion). Our revenue projections reflect the anticipated loss of sales from the termination of certain management service contracts, offset in part by growth across the company’s business segments. We anticipate, as management has suggested, that business conditions will remain challenging in 2013, so our growth projections are modest. Most of the improvement in profitability will come, therefore, from the anticipated €750 million in additional cost savings achieved through ongoing restructuring efforts.
Nevertheless, they assume that global economic growth will continue at a modest pace. Given the cost reduction efforts, there is upside leverage to our projections, should spending by service providers improve at a faster than anticipated pace. Of course, there is also downside risk to our estimates. The current consensus estimate for ALU for 2013 is $0.04 per share, with a range of -$0.34 to $0.23. Thus, our projection is within the range, but well above the average estimate.] –Lark Research
No...CJ...I think not
I use the consensus GAAP estimates at yahoo finance.
For the CURRENT YEAR 2013 this is a LOSS OF 13 cents a share, which is about $300M.
And for 2014, this is a PROFIT OF 1 cent a share, which is about $23M.
I invite anyone to access the ALU finance page, and click on the Analysts Estimates Tab on the left hand side of the page, and you will be taken to a new page where it is very clear that:
The average consensus estimate for CURRENT YEAR DEC 2013 is for a loss of 13 cents a share.
The average consensus estimate for NEXT YEAR DEC 2014 is for a profit of 1 cent a share.
If you have a problem with those GAAP numbers write a mean letter to yahoo....or you might consider not acting like a fool.
Actually, the opposite is true.
There is nothing clever, unique, or insightful about reducing headcount to the point where Q results will make a strong statement, especially since ALU has an excellent example in NOK with regard to how well that option works.
The time for ALU to be subtle in its restructuring effort has long since past. On the heels of several failed restructuring efforts, indeed, essentially continuous efforts extending back 6 years, ALU needs to make a dramatic statement about their unequivocal intent to become profitable. And making a 1 cent per share profit for all of 2014, a full year after the 2013 performance plan, is NOT THE WAY to do it.
So there in nothing genius, or even smart for that matter, about making the obvious necessary cuts, selling assets, or selling future licensing revenue, etc., to dramatically change the course of the company. These sampling of options, if done in sufficient quantity and in a timely manner, that can restore company profitability and credibility.
ALU needs to get out of the telecom category of the "walking wounded"...or they may wind up as the corporate equivalent of "the walking dead".....and change their trading symbol to ZMBI.
Obv. you are equal to the bad minded analists that will probably upgrade the estimates after ALU will post blowout results..... meanwhile it´s clear that you´re here for bashing and missleading.
Nobody exept you is so naiv to believe the story of the buy side analists with the estimate of one
cent for 2014...the same analists were those who estimated on the sell side 47 cents for 2012 in advance....LOL
Sentiment: Strong Buy
While i certainly agree that no company should keep unneeded employees on the payroll as a form of corporate welfare I think a very strong argument can be made that several of ALU's products now can be considered ones with very high growth potential. Notice recently the uptick in lightradio contracts. This is really starting to take hold..because it's the only solution that will work for the demand that is coming. Add to that core routers...carrier cloud ..vdsl2...a transition to LTE voip...and there is a lot to be enthusiastic about in terms of growth. With that in your future...do you let large numbers of people go? Letting them go is COSTLY and VERY disruptive to the overall business. Not to mention the unions and politics involved. I think that Ben was trying VERY hard to walk that fine line. The problem is..he kept getting hit with something else....a weak Europe...margins declining...patents they couldn't license and a ruthless wall street when it comes to analysts and their vision which i think leaves a GREAT deal to be desired. Ultimately..shareholder pressure won out. That's why Ben is gone. And i still have very mixed feelings about it. Q4 wasn't bad and was a beat across the board..his plan had ANOTHER 800M in cuts to go this year and the products developed under his watch are now starting to do very well. We shareholders are going to spend a LOT of money getting rid of even these 5500 people and more will be spent if more are let go. It would be a crime if in a few months they were needed right back again because then you hope they're available and it costs to bring them back.
These are TOUGH questions with no easy answers. I think what we would have seen with Ben was in June or july...more would have been announced IF it was needed. That was his style all along. And while we shareholders hate where the stock is now..i think it was the right way to go. One thing is clear. The new CEO is going to get credit for a LOT that Ben did. I wish them both well.
Sentiment: Strong Buy
I think you are mistaken....Michel will probably significantly enhance the 2013 plan....probably stripping out Ben's signature on that plan.
Also, I thought the 2012 and 2013 combined cost reduction goal was 1.25B euros. At the CC, the company announced that they were ahead of schedule on the cost reduction goal....that they had already hit the 650M euro savings point. So ALU has 600M euros left on the savings goal...not 800M euros.
4Q was okay in several regards, and even better in some areas. But we are talking 4Q here, and therefore the seasonal CAPEX dump, so a decent to good 4Q is not unexpected at all. 1H13 will give a much clearer picture about the effectiveness of the restructuring plan.
Light Radio is an excellent product. But look at the Goldman presentation, and you will see that even the combined estimated sales of Light Radio and LTE don't even come close to replacing the expected lost revenue from CDMA legacy products in 2015....almost 3 years from now. So while a real contributor, Light Radio, by the company's own numbers, will not be nearly strong enough to do what the company needs.
In the past, ALU has failed to act aggressively when it comes to reducing headcount. It seems like they have always taken the view that they could grow revenue to accommodate the existing structure. And this has not worked. They need to disregard that kind of logic in the future.
They are already needed. ALU doesen´t have to cut headcount because it would be enough not to hire two years and the payroll would diminish 6% through pension, ended contracts, disciplinary fired etc.
By the way.. cuting headcount means losing marketshare at the same time. You can do that if you can afford
it to do. If not you have to do the low margin jobs untill high margin spending pick up.
Sentiment: Strong Buy
I think you are stretching a bit to justify Ben's performance, the one that just got him canned by a Board that clearly didn't want to do this but had to. You seem to be saying that when business declines and you are losing tons of money, you hold onto all of your employees, and only start reducing headcount when business starts to pick up, when presumably you can use more help. I think that is upside down. After Q1 2012, when poor befuddled Ben could only come up with his calendarization theory because he had no idea what was going on, John Chambers at Cisco began cutting. Cisco had actually had a good Q1, but Chambers could see that Q2 was going to be tough, so he right sized his business. That's why he has a $20 stock. If business picks up later you can always hire people back. Yes, it may take some time to get them back to speed, but it is much better to have too much business to handle, then too little and a bloated payroll. If ALU suddenly finds itself with more business than it can handle, and can't hire workers fast enough to meet the demand, then it can temporarily decline the lower margin orders. That will help bring up its margins, which ALU desperately needs to do.
As for NSN, I agree that this is a lesser business. ALU has been developing products and relationships for over a century, while NSN is something like 6 years old. ALU has all of the advantages over NSN except management aggressiveness. Based on the Board's choice for a new CEO, I am thinking that they want someone more like NSN's CEO than the one they have had the last 4 years.
OK wb...You can´t say that Ben didn´t cut at all and "enogh" is interpretation issue
as ALU doesen´t have the business management relationsships that CSCO has.
I will give just three examples that needed the hadcount Ben coulden´t cut because
as you can already smell the areas are flourishing again:
Cable, optics and even CDMA
Sentiment: Strong Buy