ALU appoints new CEO, HSBC downgrades stock from neutral to underweight
Late last week ALU appointed a new CEO, Michel Combes. Over the weekend, HSBC downgraded the stock from "Neutral" to "Underweight" and the target price from € 1.70 to € 1.20. The investment bank believes that the appointment of Michel Combes as CEO "does not change the cards on the table".
In other words, regardless of who the CEO is, in order to avoid bankruptcy, ALU is going to have to make major cuts in areas that it isn't competitive, such as optical networking, and focus on areas where it has a competitive advantage, such as routers. INFN is getting closer to losing what had been one of its major competitors. Historically ALU has been a major supplier of optical networking products to Verizon and AT&T. I doubt if these companies will continue to buy from ALU for very much longer. CIEN and INFN are emerging as the 2 strongest players in the optical space, and they will be splitting most of VZ and T's future business.