This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Lucent's Last Stand

Alcatel-Lucent (ALU - Get Report) is set to deliver its third-quarter candy Wednesday morning, and investors are curious whether CEO Pat Russo will continue to hand out the treats.

After going three-for-three on quarterly shortfalls this year, Russo was put on notice by the Alcatel-Lucent board and given one month to present an "emergency plan" for the company.

That month ends tomorrow, and Russo has already said, as indirectly as possible, that more firings are ahead.

"Given ongoing dynamics in the rapidly changing telecom industry," Russo said last month, "the company is taking steps to accelerate the execution of its current restructuring program and to implement additional focused cost reduction plans."

Since its merger last year, Alcatel-Lucent has been struggling to integrate its sprawling telecom equipment businesses amid a spending slowdown in networking gear. The two trends have haunted Russo during her entire run as the combined companies' chief executive. Alcatel Lucent's original target was to eliminate 9,000 jobs over three years. Then, after a profit shortfall in February, the target was expanded to 12,500 workers.

Similar to her tenure at Lucent, Russo has had the misfortune of managing companies down. Telco consolidation and fading revenue opportunities have left Russo with heavy burden of repeated cost-slashing adjustments.

Russo was issued the "full confidence" statement from the Alcatel Lucent board last month, but industry observers say unless the company's fortunes start turning around quickly, it will be hard for her to keep her job.

Perhaps one factor in her favor is that the two most likely successors left the company in August. Former COO Frank D'Amelio left the communications equipment giant to take the top finance job at drug shop Pfizer (PFE). And former President Mike Quigley decided to "return to Australia," according to the company.

Other gear peers have also felt the squeeze in recent months. Tellabs (TLAB) and Ericsson (ERIC - Get Report) both warned of weaker-than-expected orders for phone equipment in the U.S.

Last month, Alcatel-Lucent lowered its guidance for the year, saying sales could be flat compared to 2006. Prior to that, the company had expected single-digit top-line growth for the year.

For the third quarter, analysts are looking for an adjusted profit of 3 cents on sales of $6.2 billion.

So far this year, Lucent shares have lost a third of their value. The stock was down 4 cents to $9.56 in midday trading Tuesday.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
ALU $3.70 -0.80%
ERIC $12.69 -1.09%
AAPL $123.25 -0.80%
FB $83.30 0.35%
GOOG $548.34 -1.23%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs