Maybe it's just me but personally I don't see that much risk.
First...the products. Truly top notch and world class and next generation. Across the board as well.
Second...while they are losing money now both on an EPS and cash flow basis...the cost cutting plan of 200M euro's..PER QUARTER next year..is going to both return them to profits AND to cash flow neutral IMO.
Third..6+ billion in cash right now. Asset sale(s)..patent licensing likely which should at least keep us close to that number and paying for the restructuring as we proceed.
Fourth...i think they'll be successful in refinancing their 2015 debt. Taking it out to 2018 or even 2020.
Fifth...they then have the cash to pay off 2013 and 2014.
Sixth..there is always the option of them extending and/or increasing this cost cutting plan by a few hundred million mid year next year. And, it's been their style to this date to do exactly that first with the 500M additional announcement this year AND then the other 800M.
AT+T and these other carriers announcements are CLEARLY showing that ALU's strategy and vision is what is in store for next generation. Smartphone and tablet sales aren't going to let carriers slack for long. They'll either upgrade..or die. The signs of that are now happening. Look at FTE..france telecom (which i'm also in and suggest others look at)...they recently lowered their dividend some..a move designed to start to increase network upgrades. Look at sprint and their softbank deal...AT+T and their increased spending. This is all supporting my testing which is telling me that some networks are literally crumbling right now. Just wait until 50 more iphones are sold.
Wait until every vehicle has an indash tablet. Just wait until data is flowing at 20 times what it is today.
Where is the RISK then in all of this? Who was it that said...there is nothing to fear...but FEAR..itself?
I think that is what we're looking at here in massive quantities. A stock that has underperformed for so long that people simply aren't recognizing when things are dramatically changing for the better.
I don't listen to Goldman Sachs. I don't follow Bernsteins lead. I march to one drummer.
The one around my own neck. I take my measuring tools out into the field and see the dial up speeds happening right now.
I fear nothing because of that.
AND...while i'm certainly not their spokesman..I think that Ben and Paul know it better than i do.
they can't say it though. The carriers are their customers. They can only say..we're in transition.
Data is going to be ...big. Watch them closely though. There's a twinkle in their eyes despite all the negativity. I think it's a knowing twinkle. I think they don't want to cut more right now because they believe we'll need these people because of the growth.
I think goldman bernstein has this one all wrong.
Sentiment: Strong Buy
In my humble opinion it's a good risk because:
- The pps is undervalued (at fire sale prices!- less than book value).
- $2b Market Cap with $18b annual sales?!!!!
- An exellent candidate for take over at much higher pps than $1.00.
- ALU is too important for France to fail (80K employees-operating in 150 countries).
- ALU has a lot of hidden values ( Customer recognition,patents, new ideas, etc.)
- Capex is picking up, AT&T alone is spending $20b in each of the next 3 years.
- Europe WILL clean up its financial mess, and will grow again.
- South Asia, and South America markets growing fast.
- ALU will reschedule its L.T.debts.(CFO working on cash flow as top priority).
- Upside on ALU is quite attractive at these prices.
- If not a multi-bagger, at least 3 to 4 times the present prices.
Wishfull thinking on my part? Perhaps, but based on some facts not hype.
Good luck to all longs.