Omid Tahernia, president and CEO of Ikanos, said, "As anticipated, the rapid drop in demand for our legacy products in certain maturing markets, most notably Korea, resulted in a decline in revenue for the second quarter." .......However, ......."our new products continue to show positive momentum, with Velocity-3 and inSIGHT making great progress at carrier trials and Vx500 receiving tremendous market interest following its official roll-out at Computex in June."
"While we anticipate returning to revenue growth by year end, the third quarter is expected to remain sequentially flat," said Tahernia. "This is due to a combination of two factors; our reduced but now stable legacy revenue, and delay in customer ramps of certain new multi-mode gateway designs."
A stable legacy revenue stream and positive momentum for ALU's new products in Q3 would be extremely bullish for ALU's price per share. Could it be Ikanos (and ALU's recent investment in it) is telling us something positive about Alcatel-Lucent's third quarter numbers "Ahead Of The Crowd". ...........Tickerguy
Belgacom and Alcatel-Lucent activate world’s first nationwide VDSL2 vectoring network
Belgacom customers in Mechelen can now experience broadband connection speeds of 70 Mbps over existing copper lines
Belgacom, Belgium’s largest telecommunications services provider, and Alcatel-Lucent announced the activation of the world’s first nationwide VDSL2 vectoring network, delivering significantly higher speeds for a better broadband customer experience. This achievement is the result of a successful co-development partnership to further exploit the capabilities of DSL technology.
With the improved technology, Belgacom has boosted broadband connection speeds over traditional copper lines from 30 Mbps on VDSL2 to 70 Mbps on vectodanger VDSL2 lines. After testing with thousands of subscribers throughout 2013 Belgacom finalized the processes necessary to allow the smooth activation of vectoring for the first customers using a new generation modem, the b-box3.
Nationwide activation of the vectoring technology began in December 2013 with the town of Mechelen to be soon followed by Herstal, Laeken, Roeselaere and Mons. A next phase of towns will be activated from April 2014 onwards. By 2016, Belgacom will have completed the upgrade of its entire VDSL2 network consisting of 22,000 remote optical cabinets, making Belgium one of the best-connected countries in the world.
As the vectoring technology is deployed, Belgacom is preparing for a new era of enhanced digital services, with more non-linear and personalized TV services including TV Replay, personalized content, Video-on-Demand, high quality streaming, Teleworking services, Home monitoring, and evolution to Ultra HDTV (4K).
Belgacom and Alcatel-Lucent have been collaborating on VDSL2 vectoring since 2011 together with home gateway manufacturers Sagemcom and Technicolor, and the chipset developers Broadcom and Ikanos
End 2013, Belgacom had well over 1 million active VDSL2 lines and a VDSL2 network covering 88,5% of the Belgian population.
VDSL2 vectoring complements long-term fiber deployments by enabling service providers to use existing infrastructure to quickly and cost-effectively increase internet speeds to meet its retail and wholesale customers’ demands
With Alcatel-Lucent executing The Shift Plan, the industrial strategy to reposition the company as a specialist vendor of IP Networking and Ultra-Broadband Access, VDSL2 vectoring is a key segment of the company’s portfolio of technologies enabling telecommunications operators to deliver superfast Internet access to households and enterprises alike
Johan Luystermans, Vice President Network Engineering & Operations with Belgacom:
“Today, Belgacom is living up to the commitment we made back in 2011 to make Belgium one of the world’s leading ultra-broadband nations, with millions of households connected to our fiber and VDSL2 vectoring network. As demonstrated for more than 15 years, Belgacom has continued to innovate as world pioneer in the development of new generation DSL. We take pride in paving the way of new technologies and are delighted to be the first telecommunications service provider in the world to activate VDSL2 vectoring on a nationwide network. Our partnership with Alcatel-Lucent has been key to achieving this.
Sound View Innovations, LLC offers intellectual property licensing services for distributed computing, internet content delivery, social media, and network management. The company was incorporated in 2013 and is based in Jersey City, New Jersey.
101 Hudson Street
Jersey City, NJ 07302
Founded in 2013
Recent Private Companies Transactions
February 10, 2014 Alcatel Lucent S.A., Portfolio Of 500 Alcatel-Lucent Patents in Force Worldwide
should read....revenue in general and IP in particular will remain under pressure in Q3 and perhaps even Q4 as ALU’s main telco customers continue to emphasize access over backhaul and constrain their capex budgets in the second half of 2014.
Stocks that move up in price over a sustained period of time are generally stocks of companies that have at least several of the following traits:
1. First mover in an important emerging industry or market
2. A sustainable competitive advantage
3. Strong price appreciation in the recent past
4. Strong consumer appeal
5. Smart management
6. The financial institutions believe the shares are undervalued.
Alcatel-Lucent’s Q2/2014 report did not contain any information that indicated the company was a first mover in an important emerging market or that its products have a sustainable competitive advantage. And clearly the continued price erosion of the share price is prima fascia evidence financial institutions do not consider the shares undervalued. The events of the past year do indicate that Michel Combes and Jean Raby are smart managers. A score of one out of six is not exactly the right stuff to propel ALU to the top of the list of investment choices of big institutional money managers. Yet, long-term shareholders and recent acquirers of the stock are quite optimistic about the appreciation potential of ALU shares. Is that optimism justified by the progress reflected in ALU’s Q2/2014 report? The short answer is “Yes”.
However, there is likely more “Agony of Defeat” than the “Thrill of Victory” on the near-term horizon. Cash burn will remain quite high in Q3 and revenue in general and IP in particular as ALU’s main telco customers continue to emphasize access over backhaul and constrain their capex budgets in the second half of 2014.
On the plus side, LightRadio will ramp to full commercial distribution in the first half of 2015, submarine will have its IPO, restructuring cash expenditures will radically decline during the same time period and IP core will enjoy significant growth in response to all the new traffic demands on existing networks.
While the first half of 2015 might look fine, it is Q3 numbers investors are concerned about.
To be continued
I am ABSOLUTELY not a fan of Mr. M since I hold him responsible for the China situation. It happened on his and Mr. Yurek's watch. Under Greg, he was in charge of the China business and how that situation entitled him to become CEO I will never understand. Also, I do not trust CEO's that sell company stock! Moving on..........
To quote your quote from the Form 4,"The sale was made solely for the purpose of tax and estate planning".
Perhaps because Mr. M's accountant looked at all of Mr. M's assets and suggested Mr. M sell AMSC stock to pay his taxes because it was, among his assets, the one least likely to appreciate. In addition, Mr. M and his accountant wanted Mr. M's estate to have some value when he dies and that most likely would not happen if he held AMSC stock.
The last thing a person is going to sell for taxes and estate planning purposes (or any reason) is an asset that is going to massively appreciate!
The Form 4 is correct, "The sale was made solely for the purpose of tax and estate planning". and the best way to accomplish those two things is to sell ahead of Mr. D and "Ahead Of The Crowd". ............Tickerguy
Will ALU achieve $7 billion Euro in CORE revenue (IP routing, IP Transport & IP Platforms) in 2015?
ALU’s contracts for IP CORE routers expanded 40% in the last six months, increasing from 20 to 28. Alcatel-Lucent’s 7950XRS is a game changer and it would not be surprising to see that growth continue for the next eighteen months. As such, ALU accumulated IP Core router contract wins by year end 2014 would be 40 and 77 by year end 2015---- 2.7 times the number at the end of Q2/2014!
ALU’s CORE Q2/2014 revenue was:
1. IP Routing --------$561 million Euro
2. IP Transport ------$484 million Euro
3. IP Platform -------$324 million Euro
EVEN A 50% RISE IN QUARTERLY IP CORE ROUTER REVENUE WOULD INCREASE ALU’S CORE SEGMENT REVENUE BY $1 BILLION EURO WITH TOTAL SEGMENT REVENUE IN EXCESS OF $7 BILLION EURO ANNUALLYIN 2015!
Under the “Shift” plan ALU intends to specialize in IP, Ultra-Broadband, Cloud and Virtualization. ALU’s Q214 report provides some granularity about ALU’s potential future revenue from those areas.
In the last six months:
1. IP NETWORKING
-------------IP core router contracts increased 40%-------(20 contracts to 28 contracts)
-------------1830 customers increased 17%----------------(410+ to 480+ customers)
-------------100G shipments increased 50%---------------(10K to 15K shipments)
2. CLOUD & VIRTUALIZATION
-------------Nuage contracts increased 166%--------------(3 contracts to 8 contracts)
-------------Virtualization trials increased 200%----------(18 trials to 55+ trials)
-------------LTE contracts increased 22%------------------(45 contracts to 55 contracts)
-------------Small Cell customers increased 10%----------(65 customers to 71 customers)
-------------VDSL2 customers increased 30%--------------(17 customers to 22 customers)
-------------FTTH customers increased 7%-----------------(176 customers to 188 customers)
All of which bodes well for ALU’s future revenue growth and margin expansion and provides strong evidence ALU will achieve a $7 billion EURO CORE revenue stream in 2015 and that such a figure may prove to be an understatement.
Disgraceful public behavior! Makes the black community look bad, makes the city look bad and makes America look bad.
Having said that, I have to say "SIX SHOTS" is a lot of shots---To me six shots is indicative of a lot of fear and/or a lot of rage and that makes the police look bad.
That is one city where no one should want to be "Ahead Of The Crowd". ............Tickerguy
Q2/2014 (Part 2)
How likely is that to happen? CORE revenue needs to average $1.75 billion Euro per quarter in 2015 for ALU to achieve $7 billion in CORE revenue in 2015. CORE revenue stream totaled $5.933 billion Euro over the past twelve months. Looking at ALU’s latest CORE twelve month revenue stream quarter by quarter:
1. Q3/13 ... 1,496
2. Q4/13 ... 1,716
3. Q1/14 ... 1,352
4. Q2/14 ... 1,369
To achieve $7 billion in CORE revenue in 2015 the quarterly revenue stream would need to be:
1. Q1/15 … 1.585
2. Q2/15 … 1.615
3. Q3/15 … 1.785
4. Q4/15 … 2.005
How can Combes be so confident about achieving $7 billion in CORE revenue in 2015 with all four CORE segment revenues declining in Q2/14, with U.S. 2014 telco capex expected to be flat to slightly down for the foreseeable future, Europe retreating on fears of energy shortages due to the Ukraine conflict and the Mideast in turmoil?
When asked to explain how under such conditions he could expect over a billion Euro increase in Core revenue in 2015 ….
“…..that would require additional granularity, which would be a bit long to go through...”
However, “…..you can expect from us that we have this type of granularity operator by operator, ….so that is my answer…..”
In other words take his word for it that ALU knows what the demand is operator by operator and therefor his statement of :
….. “To be absolutely 100% clear, I reiterate our EUR 7 billion target for core network revenue in 2015”…..
Clearly the shift plan is on schedule or ahead of schedule, one can only hope that ALU’s view of future demand for its CORE portfolio is correct and that CORE revenue has it own shift plan ….shifting into a much higher revenue stream in the near future.
To be continued:
Alcatel-Lucent a net loss of $298 million Euro, my personal expectation was a net loss of $120 million Euro.
While the Q/Q improvement was $587 million Euro one has to realize that in 2Q/2013 ALU took an impairment charge of $552 million Euro, therefor sans the impairment charge the improvement Q/Q was only $35 million Euro!
In Q1/14 and all reported quarters since Michel Combes became CEO, ALU’s IP segment has been ALU’s strongest area both in terms of growth and profitability while the Access segment was the weakest. However, in Q2/2014 Access grew and IP declined. I am sure many analysts and investors (me included) expected Access to show significant improvement Q2/14 (because of all the contracts signed in 2013 – 2014) and for IP to continue to grow as well. So what happened?
Management’s explanation was IP declined at the expense of Access growth and
…. “ one should not over-read a single quarter performance given the variability we may and have already experienced.”
The thought/theory being that telcos put off IP investment in Q2/14 because of the need to address access investment first and that IP investment will follow in due course because of the continuing data traffic tsunami. While that thought/theory may in the end prove to be correct one has to ask why Juniper and other ALU competitors in the IP space did will in Q2/14 and ALU did not.
On that point Combes stated:
….. “To be absolutely 100% clear, I reiterate our EUR 7 billion target for core network revenue in 2015”…..
In Q2/2014 CORE revenue was:
1. IP Routing revenues fell by 7% to --------$561 million Euro
2. IP Transport revenues fell by 6.2% to---- $484 million Euro
3. IP Platform revenues fell by 19.2% to-----$324 million Euro
TOTAL Q2/2014 CORE REVENUE----------$1.369 million Euro….. ($5.476 billion Euro annually)
To achieve $7 billion in core revenue in 2015 core revenue must increase 29% in the next 18 months! How likely is that to happen?
To be continued:
I apologize to the board about the spelling of ANATOMY as ANOTOMY. I do not know why spell-check did not catch the spelling error on the original posts in May and I just copied and pasted the old posts so the spelling error was repeated. Still I hope the information will help those who think for themselves make their investment decisions about ALU "Ahead Of The Crowd". ..............Tickerguy
It took a while but YAHOO finally allowed all of the parts of "An Anatomy Of A Sacrifice Fly" to be re-posted. I guess I have developed quite a "Hate Following" judging from all the thumbs down numbers on the posts. I am not sure why all the thumbs down since the meat of the posts are stats from the Q1/2014 CC and some fairly conservative estimates using Q1/14 as a baseline.
Why the re-posts? In a few days ALU will present its Q2/2014 numbers and it is a good idea to be familiar with what ALU accomplished in Q1/2014 in order to judge the degree of progress being made and make the right investment decisions about Alcatel-Lucent's progress "Ahead Of The Crowd". ...............Tickerguy
ANOTOMY OF A SACRIFICE FLY (IN Q2/14) ----Part Six (5-21-2014)
At this point the pitch (2Q/13 benchmark) is halfway to the home plate and Alcatel-Lucent’s management has a pretty good idea how good a swing the company will have at beating 2Q/13 numbers when the company reports on or about July 30th, 2014.
Comparing total revenue Q/Q is murky at best. Why? Because 2Q/13 included revenue from ALU’s Enterprise segment and partial revenue from discontinued and unprofitable managed services contracts. In addition ALU’s core segment and access segments in Q1 had diverging revenue streams with core revenue rising and access revenue falling Q/Q.
ALU’s 2Q/13 revenue rose 11.6% sequentially; applying an 11.6% sequential increase in revenue to ALU’s first quarter revenue would imply a 2Q/14 revenue stream of $3.3B Euro. However, ALU’s core segment is growing at a much faster rate and access is improving significantly in spite of its Q/Q revenue decline in 1Q/14 (the ramp rate for VDSL2 shipments is impressive ---going from 1 million to 5 million units in just one year!) As a result, total revenue in 2Q/14 will likely be north of $3.3B Euro.
$3.0B Euro-----Strike Out
After examining the 1Q/14 numbers and adding a lot of fudge factors, the most likely 2Q/14 revenue stream is $3.4B Euro
Operating profit is likely to expand from $33M Euro in Q1/14 to $94M Euro in Q2. A $94 million Euro operating profit assumes a sequential 20% revenue increase; $20 million Euro reduction in fixed costs Q/Q and a 1% operating margin improvement.
Estimated Q2/14 Cash Flow:
1. Adjusted Operating Income---------$94M Euro
2. Change in WCR---------------------- $90M Euro (inventory for NBN in Australia)
3. Segment Operating Cash Flow----- $ 4M Euro
4. Depreciation & Amortization-------- $51M Euro
5. Operating positive Cash Flow---------------------- $55M Euro
6. Less Interest Expense------------------------------------------------ $ 89M Euro
7. Less Taxes------------------------------------------------------------- 40M Euro
8. Less Pension Funding------------------------------------------------- -0- Euro
9. Less R&D-------------------------------------------------------------- 105M Euro
10. Less Restructuring Cash Outlays----------------------------------- 200M Euro (initial layoffs)
Q2/14 TOTAL CASH BURN ----------------------------------------------$378M Euro
The total cash burn goes up sequentially in Q2 versus Q1 because of an assumed $90M Euro increase in cash restructuring cost Q/Q and a continued increase of $90M Euro in Working Capital Requirement because of ALU’s recent China and Australian contract wins. Most will view a $378M Euro cash burn in Q2 as a pop-up hit rather than a sacrifice fly to deep center field.
$478M Euro --------Strike Out
$378M Euro --------Pop Up
$278M Euro --------Single
$179M Euro --------Double
$ 79M Euro --------Triple to a Home Run
ANOTOMY OF A SACRIFICE FLY (IN Q2/14) ----Part Five (5-15-2014)
As Alcatel-Lucent comes to bat in the 4th inning (Q2/2014) of this nine inning (nine quarter shift turnaround plan) ball game, stats from Q1/2014 leave little doubt ALU will again hit the ball. The question is will it be a sacrifice fly to deep center field or an infield pop-up that does not allow a run (long investors to make a score). It all depends on how well ALU keeps its eye on the ball (the shift plan) and what is being thrown at it (Q2/13 numbers and the macro environment).
FACTORS FAVORING AN INFIELD POP-UP
1. Q2/2013 numbers are much stronger than Q1/13 numbers
2. Q/Q progress will be much harder to achieve
3. Cash restructuring cost will increase $90M Euro to $110M Euro versus Q1/2014
4. Fixed cost savings rate is slowing
5. Revenue generated in China has lower gross margins
6. Only ½ of Chinese revenue goes to ALU (ALU only owns 50% of Shanghai Bell)
7. A continued high cash burn in Q2/2014
8. Little or no improvement in the balance sheet
THE SWING---(Factors favoring hitting the ball squarely)
1. Operationally profitable in Q3/2013, Q4/2013 and Q1/2014
2. Sequential improvement in operational profitability Q1/14 to Q2/14
3. Dramatically improved balance sheet from 2013
4. ALU is growing and taking market share from its competitors
5. China's growth is slowing but ALU's Chinese business is expanding
6. New product revenue is now more than offsetting the decline in legacy revenue
7. Accelerating CORE & ACCESS revenue via 7950XRS, VDSL2 and Nuage contracts
8. Improved gross margin quarter over quarter
THE PITCH---(The Q2/13 numbers ALU has to beat to show improvement)
1. Revenue of $3.612 Euro
2. Revenue growth y/y of 3.3% in constant currency
3. Adjusted gross profit of Euro $1.151Billion
4. Gross margin of 31.9%
5. Fixed cost savings of $120M Euro
6. Operating income of $46M Euro
7. Cash burn $248M Euro
8. Sequential revenue growth of 11.6%
9. Sequential gross margin improvement of 2.4%
10. Net loss per share (0.39) per share
11. Net loss $855M Euro
12. Restructuring charge $194M Euro
13. Impairment charge $522M Euro
I am having a little trouble with Tara Neal's math,
"the worldwide sales of telecom and datacom equipment and software expanded another 3 % last year to a total of $183 billion in 2013 with the Asia Pacific outdoing North America in terms of growth. Asia Pacific grew 6% compared to 4.5% growth recorded by the North American market and is expected to keep up similar momentum for the next 3 years."
How does $183 billion in 2013 get to $1.01 trillion in the next three years with a growth rate of 6%?
Is Tara Neal seeing something that will impact the growth rate "Ahead Of The Crowd"? ............Tickerguy
ANOTOMY OF A SACRIFICE FLY (IN Q2/14) ----Part Four (5-14-2014)
SOME QUESTIONS FROM THE ANALYSTS
1. Q: How many of the 15 unprofitable Managed Services contracts have been terminated and what is the likely revenue stream for Managed Services going forward?
A: Fourteen contracts have been terminated and ALU is finalizing the exit from the last contract. After the finalization of the last contract, Managed Services will have a profitable revenue stream of $550M Euro down from an unprofitable revenue stream of $1Billion Euro.
2. Q: What is the next step in improving the patent revenue stream?
A: Jean Raby is building a patent monetizing team to achieve the patent income level stated in the Goldman plan for 2015.
3. Q: So far ALU’s outsourcing is creating additional expenses due to overlap, will ALU really be able to cut internal tasks in so far as overlap in 2014 is temporary.
A: Outsourcing for HR, Finance and IT are already up and running, a few more things in outsourcing in R&D to be announced very soon.
4. Q: How is ALU able to do better in North American than its peers”
A: ALU has a broader product portfolio and a broader customer base than its peers in North America. Expect continued slight growth for ALU in North America for the remainder of 2014.
5. Q: How should we think about the trend in ALU’s gross margin from Q1 to the end of the year?
A: Gross margin in 2013 was 31%, look for a gross margin in 2014 of 32% and in 2015 between 32% and 33%.
6. Q: ALU’s “CORE” revenue target for 2015 is $7billion Euro, what needs to happen to achieve that revenue target from where CORE revenue stands now?
A: There are three parts to CORE and therefore three trends involved: 1. IP Routing revenue trend, 2. IP Transport revenue trend and 3. IP Platforms revenue trend.
IP Routing’s revenue trend is double digit growth.
IP transport’s revenue trend turned around in the second half of 2013 and accelerated in Q1/14 and will continue because submarine revenue will accelerate due to contracts signed in late 2013 and terrestrial will accelerate because of new technology.
7. Q: Is ALU taking market share in North America?
8. Q: Is ALU’s wireless going to invest in 5G or be run for cash?
A: ALU’s wireless focus is on 4G and small cells and reducing legacy technologies. ALU’s wireless efforts will focus on the United States and China and be opportunistic while improving operational efficiency.
To Be Continued:
At the moment YAHOO won't let me post part 4, 5 & 6. I will try later---for those interested you can find the old posts back in May. The repeat posts do have some revisions but not a lot. Good Luck to all those that have invested in ALU "Ahead Of The Crowd". ...............Tickerguy
On the other hand he might have been saying:
FIXED COST SAVINGS 2014 PER QUARTER
1. Q1/14 -----EUR 143 million
2. Q2/14 -----EUR 154 million
3. Q3/14 -----EUR 166 million
4. Q4/14 -----EUR 178 million
Perhaps a little less because of “outsourcing duplication costs”
FIXED COST SAVINGS 2015 PER QUARTER
1. Q1/15 -----EUR 195.6 million
2. Q2/15 -----EUR 213.2 million
3. Q3/15 -----EUR 231.0 million
4. Q4/15 -----EUR 249.0 million
To Be Continued:
ANOTOMY OF A SACRIFICE FLY (IN Q2/14) ----Part Three (5-13-2014)
JEAN RABY PREPARED REMARKS
1. Alcatel-Lucent is now a two segment corporation---Core & Access
2. Operating expenses down 12% Y/Y
3. SG&A expense down 2.8% Q/Q
4. Operating profit of $33M Euro a $212M Euro improvement Q/Q
5. Geographic Revenue
A. North America down 1% Q/Q
B. North America down less than usual from Q4
C. Europe down 2.5% Q/Q
D. Asia/Pacific up 19% Q/Q
E. Middle East & Africa double digit growth (12% y/y)
F. Latin American down Q/Q mostly because of Brazil and Mexico
6. CORE revenue
A. IP Routing revenue flat versus 4Q/13 (better than usual)
B. IP Transport up high single digits (terrestrial optics & submarine strong)
C. IP Platform legacy products less than 25% of revenue stream
D. CORE segment operating profit $96M Euro versus $15M Euro Loss Q1/13
E. CORE cash flow improved due to improved profitability
A. 2G/3G now less than 25% of segment revenue
B. Managed Services down 50% Q/Q phased out unprofitable service contracts
C. Segment cash flow increased $211M Euro versus Q1/13
8. CASH FLOW
A. Negative $398M Euro for the quarter
B. $146M Euro improvement versus Q1/13 negative cash flow of $542M Euro
C. $89M Euro Interest expense
D. $110M cash restructuring costs
E. Expect $700M Euro cash restricting costs for remainder of the year
To Be Continued