Why Alcatel-Lucent (ALU) Is Up Today

NEW YORK (TheStreet) -- Alcatel-Lucent (ALU) shares were gaining 6% to $4.40 Thursday on news it is in talks to sell its phone division to China Huaxin.

The French telecommunications company said it received a 268 million euro ($362 million) bid from China Huaxin that would give the investment firm a majority stake in its phone unit. Under the proposed deal, Alcatel-Lucent would keep a 15% stake in the phone unit.

Alcatel-Lucent expects to sign the deal in the second-quarter, and close it by the third-quarter pending regulatory approval.

News of the bid comes along with the company's fourth-quarter earnings report. In the quarter, Alcatel-Lucent posted a net profit of 134 million euros, or 5 cents a share. That's down from 1.56 billion euros, or 69 cents a share in the year-ago quarter. Revenue fell 4.1% in the quarter to 3.93 billion euros.

Must read: Alcatel-Lucent (ALU) Moving On Heavy Volume In The Pre-Market Hours

TheStreet Ratings team rates ALCATEL-LUCENT as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALCATEL-LUCENT (ALU) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

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