Alcatel-Lucent ( ALU) shares tumbled Tuesday as investors and analysts isolated the cause for a big sales miss: Lucent.

In its first quarter as a combined company, the Paris-based telecom networking giant shattered Wall Street's expectations by warning of a 10% sales shortfall and the need for deeper-than-expected staff cuts.

Analysts were quick to identify Lucent, and specifically its U.S. wireless and conventional network equipment sales, as the source of the stunning weakness.

"Lucent's business appears to be the primary factor in the fourth quarter miss," UBS analyst Nikos Theodosopolous wrote in a note Tuesday.

Bad timing and significant product overlap seem to have delivered the most punishment in the quarter ended in December.

U.S. telcos trimmed spending late last year as merger plans were completed. With the AT&T ( T) and BellSouth hookup pending, orders dried up, and the cutbacks were felt across the sector as highlighted by recent results from Tellabs ( TLAB) and Adtran ( ADTN).

Even wireless, which has been a strong performance enhancer in prior quarters, showed signs of weakness last quarter. Investments in wireless network upgrades also slowed in the U.S., cutting into Lucent's CDMA sales and Alcatel's third-generation, or 3G, push, say analysts.

But perhaps even more unnerving is the apparent lack of synergies in certain product areas where Lucent gear competes head on with Alcatel equipment.

In a downgrade of Alcatel-Lucent on Tuesday in the wake of the warning, Merrill Lynch analyst Sandeep Malhotra cited wireless uncertainty and product cannibalization for his more pessimistic take on the stock.

"We think that Alcatel's gains ... come in part at the expense of Lucent. The delay in the AT&T-BellSouth merger also may have caused delays in spending. This could also end up being a systemic issue that could cause ongoing revenue leakage," Malhotra writes.

In the company's earnings release, Alcatel-Lucent chief Pat Russo pointed to uncertainty and work required to close the merger as well as weak spending and wireless market-share losses to help explain the poor performance.

In a somewhat topsy-turvy interpretation of the quarter's failures, Russo said "considerable progress was made in planning the convergence of product lines, the optimization of synergies and the preparation of cost-cutting programs."

Progress, in this case, refers in part to the need to fire more workers.

Russo pushed the company's 2007 cost savings target up Tuesday by $260 million to $781 million.

Previously, the company said about 9,000 employees would be cut over the next three years. But UBS analyst Theodosopolous writes that the new cost savings target "is consistent with our view that headcount reductions could be closer to 12,000."

In light of the fourth-quarter results, this is probably a bit unsettling to the Lucent team that has already seen its fair share of the synergy ax.

Alcatel-Lucent shares were down $1.13, or 8%, to $13.06 in midday trading.