This Day On The Street
Continue to site
ADVERTISEMENT
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

Alcatel-Lucent to Sell Enterprise Unit to China Huaxin

PARIS (The Deal) -- France's Alcatel-Lucent (ALU - Get Report) said Thursday it has received a binding offer from China Huaxin for 85% of its Alcatel-Lucent Enterprise unit. The offer values the maker of phone systems and other business equipment at 268 million euros ($362 million) including debt.

The sale, which is due to be signed off during the second quarter, would be the second disposal overseen by CEO Michel Combes since his arrival a year ago and his promise in June to sell 1 billion euros of assets by the end of 2015.

Combes promised the sales, and a 1 billion euros reduction in costs, as part of a turnaround plan, dubbed the "Shift Plan", which is the latest in a series of efforts to reverse the flagging fortunes of a business created in 2006 through the $13.4 billion merger of Altacel SA and Lucent Technologies. That deal was meant to create a technology giant with the muscle to compete across a wide range of markets but instead left the company too thinly spread and with too many low-margin, high-cost operations in declining markets.

The first signs that Combes might be succeeding where a series of predecessors failed was apparent Thursday, when the company reported fourth-quarter net profit of 134 million euros, ending an almost two-year losing streak that has cost it about 3.5 billion. Alcatel-Lucent posted a net loss of 1.29 billion euros for 2013, an improvement on its previous year loss of 2.09 billion euros.

Must Read: Debt Investors Shrug Off Puerto Rico Downgrade

"The Shift Plan is already deeply altering the company," Combes told a conference call Thursday. "The growth of our gross margin is robust and sustainable."

State-backed technology investor China Huaxin's offer for Alcatel-Lucent Enterprise comes just under two months after Alcatel-Lucent agreed to sell its LGS Innovations LLC division to Chicago's Madison Dearborn Partners LLC for as much as $200 million.

The two business form the bulk of Alcatel-Lucent's so called "other" business segment, which reported revenue of 232 million euros for the fourth quarter and operating income of 12 million euros. Alcatel-Lucent did not provide a breakdown of the revenue and income.

Combes said Thursday that he had sold Alcatel-Lucent assets worth a total 350 million euros and was on track to achieve his plan to offload 1 billion euros of operations by the end of 2015.

Alcatel-Lucent plans to retain 15% of the Enterprise unit being to China Huaxin. The Chinese company already works with Alcatel-Lucent as a partner to its Alcatel-Lucent Shanghai Bell unit, which supplies broadband technology to China Telecom Corp. Ltd.

Shares in Alcatel-Lucent traded Thursday at 3.31 euros, up 0.29 euro, or 9.5% on their Wednesday close. The shares have increased in value about three-fold in the past year, lifting the company's market capitalization to 9.05 billion euros, but still leaving it just under two-thirds lower than its value in the immediate wake of its formative merger.

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
Only $9.95
14-Days Free
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
SYM TRADE IT LAST %CHG
ALU $3.58 0.00%
AAPL $126.44 0.00%
FB $87.28 0.00%
GOOG $523.40 0.00%
TSLA $280.02 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs