Alvarion Is the Perfect Dance Partner for Alcatel-Lucent

I'm not certain which produces the largest number: Presidents of the U.S., Super Bowls or restructuring programs at Alcatel-Lucent (ALU - commentary - Cramer's Take). As we sit on the precipice of a new year, Alcatel-Lucent's management has seen fit to outline yet another installment of "As the World Churns."

Last Friday, the new management team launched its latest attempt to salvage this company. In contrast to some of the other attempts in the past, the new Alcatel-Lucent is not going to attempt to be all things to all people. Management's presentation included all the right verbiage: "strategic," "reinforce," "share," "disruptive" (my personal favorite) and "rationalize." What all this mumbo-jumbo means, however, is that the company is going to restrict its efforts and resources to four key (think strategic) areas: IP, optical, broadband and application enablement.

Unfortunately, there's little in the land of communications that doesn't fall under this umbrella, but to be clear about it, management did provide some insight into what would be de-emphasized internally.

At the top of the list of things to be addressed via partnering and co-sourcing was good old WiMAX. And that's where Alvarion (ALVR - commentary - Cramer's Take) might come in.

Prior to its merger, Alcatel OEM'd the Alvarion 802.16d (fixed wireless) solution and was working to develop its own 802.16e (mobile wireless) solution. Lucent, on the other hand, OEM'd Alvarion's 802.16e solution. That relationship came to an end when the Alcatel-Lucent suicide pact was consummated in November 2006.

Fast-forward to our current time frame, and the budding WiMAX industry now has more than 300 commercial deployments in place worldwide. Precious few of those are supported by Alcatel-Lucent equipment as the company simply has not been much of a factor in the industry thus far.

While Alcatel-Lucent has hung its hat on the cellular side of the wireless broadband house, the arrival of long-term evolution (LTE) products continues to be problematic at best. Verizon (VZ - commentary - Cramer's Take) Wireless's bold proclamation of having an LTE network up and running in late 2009 is just that -- a bold proclamation. Anyone can make one, and you're not putting much skin in the game by doing so. More realistic efforts put commercial LTE services at 2011 to as late as the midteens for subscribers in volume.

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At the time of publication, Faulkner had no positions in the stocks mentioned, but The Telecom Connection model portfolio was long Alvarion.

Bob Faulkner has been in the investment business for 18 years with an exclusive focus on technology stocks. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Faulkner appreciates your feedback; click here to send him an email.

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