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Alcatel-Lucent Message Board

  • tradestoxx11 tradestoxx11 Apr 26, 2013 10:33 AM Flag

    They sand bagged Q1

    folks..i've been saying for WEEKS now that what management was going to do was to make Q1 look bad.
    Why? Ben was leaving....blame it on HIM and his era. And it let's Michel come in as of April 1st and start to look like a hero.

    Look at things like restructuring charges. They SLAMMED this quarter with 100M worth. There is a LOT of your extra cash outlays right there. They then SLAMMED cash some more with capital expenses.
    Those TWO items alone are HALF of the cash spent in the quarter.

    Q1 had ALL the YEARLY vacation time accrual charged to it.....

    Q1 they took out the goldman loans that were to be used to pay off the other loans. They DIDN"T pay them.
    They paid interest instead on BOTH.

    This is so blatant and attempt to make this quarter look worse than it had to be. And if you listen to the cc you will hear paul being called out on some of this stuff.

    Listen to paul be FORCED to say..."we are well aware of the carrying costs of this loan"...and saying to the analyst who questioned him..."we promise we'll be paying off the other loans".

    lol. It's hysterical really.

    Notice what else. They kept this quarters cost cuts to the bare minimum. They could have cut 200M like other quarters. They didn't. They cut 100M.

    In fact..there was enough here IMO to have made this -10 cent quarter be -5 instead. They just didn't do it.
    Because it served NO purpose for the incoming management to do so.

    Watch now how business IMPROVES as the year moves on. How ALL the cost cuts get inacted. And how Michel adds to the current plan in his June presentation.

    What do i think of aLU's stock? It is a STEAL at this price for those with some patience.
    Look at Sprints chart to get an idea of how this one will go the next 2 or 3 years.

    ALU is going to succeed. And this new CEO is going to make it happen.

    ~TS
    jmho

    Sentiment: Strong Buy

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    • I agree

    • "Q1 they took out the goldman loans that were to be used to pay off the other loans. They DIDN"T pay them.
      They paid interest instead on BOTH."

      In addition, they could have also use the GS loan to pay for the $100M restructuring costs which they initially intended. That would have reduced the cash burn instead of coming out of the earnings.

    • sand bagged it and had to show the unions it is worse than they think to start greater job attrition another 5% headcount reduction coming

    • Use some common sense.

      Everyone knows that 5 years of Ben is why we find ourselves in the current predicament. There is no silly "gamesmanship" going on to place blame. That is ridiculous.

      The restructuring charge of about 129M Euros is about 1/4th the amount expected for the year. So it was quite predictable.

      ALU has a lot of debt coming due between now and early 2015. This debt is SIGNIFICANTLY in excess to the value of the Goldman loan, considering that about 900M Euros of the Goldman Loan is earmarked for restructuring. Therefore, ALU must devise a strategy to address the debt knowing that the Goldman cash is inadequate. That strategy must consider expected, future performance (profits), as well as cash raised from asset sales, etc., even as the company struggles to maintain a positive net cash position. So it is very complicated. And it is appropriate that the company take their time, sacrifice some interest expense, then address the loans coming due. And no, ALU is not in a position to borrow more money....though it will be able to offer convertibles if shareholders approve cutting the nominal value of the stock. In the end, though, the bond debt coming due MUST be addressed.

      There is no "attempt", blatant or otherwise, to make the Q look bad. LOL.

      Do you really believe for a second that ALU could have cut costs by 200M Euros in 1Q, but elected to just do half that amount. I mean, do you believe that this is all some silly game of "blame" and "gamesmanship". It is not.

      ALU has very serious, significantly intractable problems which are the result of 6 years of poor decisions, low cost competition and the economy. And even though management has been laughably ineffective, I have no doubt that they made their decisions with the mindset to save the company, which is a path that is getting increasingly difficult with each passing quarter.

      If they could have cut costs by 200M, 300M, 400M Euros, they would have, in a heartbeat.

      • 3 Replies to rumors_twilight
      • ...happens all the time...not blatant...there's a lot of latitude from an accounting perspective even with SOX's compliance in place. The key here is rev's are kicking in from new products and old product rev's decreasing is a lot less significant at this point....they reported they way they did to enable them to more easily execute strategy...ie - keep firing the dead weight. Next Q will be a very different story, layoffs should be complete..

        Sentiment: Strong Buy

      • Twilight,,,I agree with you,,,They cannot afford to play games and they were not playing games..
        It was a bad qtr,,,I dont see any benefs from all the cost cutting as they were offset by bad trends in the business,,,South America was bad,,,,China was suppose to be big...it was bad....Europe was bad.....USA saved them or it would have been a lot worst.....Maybe the layoff of 5500 employees in the 1st qtr will not decrease expense until 2nd qtr. I dont know......I saw very little to cheer about..
        Margins were very bad.....Cost cuts have not worked so I am not sure what will save ALU.
        The loss was massive,,,anyway you look at it.....Maybe the contracts they signed wont kick until the 2nd qtr?

      • And you know, we are all extremely impressed with Basil Alwan and the success of his IP unit.

        Literally, Q after Q, his unit is the sole reliable bright spot for the company.

        It will take exactly one bad Q for the IP unit to throw ALU's recovery plans into serious disarray, since I have not doubt that the IP unit is the financial backbone of the recovery plan.

        As great as Basil is, as fabulous as the IP unit's products are, every business stumbles at some point in time. And we had better hope that ALU's IP unit does not stumble for at least the next 2 years.....as it will take that much time for the company to become barely profitable on an annual basis.

        That is a heavy burden for the IP unit to bear. And contrary to popular belief, even though they are awesome, the IP unit is not bulletproof.

    • totally agree....I was expecting them to pin as much on Ben as they could to make Coomes look good going forward and build some momentum.

      Rev's are turning and can solve many problems...

    • here's more that roman posted earlier..
      "Reuters) - ALCATEL-LUCENT : * Paul Tufano, CFO says Q1 cash burn worsened because of timing of contracts being paid by customers. * "It's just timing regarding when you get the cash. It represents a few 100 mln of the cash burn that was more pronounced this quarter than last year. This doesn't represent a step down in terms of cash burn; it's just a question of timing."

      What THAT is called is...don't push the customers too hard to pay you this quarter.

      lol...
      Folks..lets ADD IT UP.
      you have about 240M euro in restructuring and capital expenses...
      100M in cost cuts they don't take...
      a very NON aggressive push to collect money they're owed..
      A FULL years vacation time accrual taken in Q1 as a charge against SG+A OFFSETTING THE 100M in cuts they DID take..
      you have them TAKING OUT THE GOLDMAN LOAN TO PAY OFF OTHER DEBT..NOT payng off the other debt and paying interest on BOTH. LOL!

      This is as close to corporate terrorism as i've seen in a long time....

      Or...shall i say..making your new incoming CEO look like a hero later this year. :)

      Sentiment: Strong Buy

    • Good and interesting analysis. The whole report could perhaps be compared to Mohammed Ali's Rope-a-dope....the ultimate head fake:)

      Sentiment: Strong Buy

 
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