In the light of recent news story by Leila Abboud published on November 4 on reuters.com about telecom equipment producer Alcatel-Lucent intentions to generate 955 million euros ($1.3 billion) from shareholders and $750 million from a high-yield bond to reduce debt and propel what its boss described as a last-ditch attempt to save the business, DigitalOlympus.com comments on strategy of the firm.
According to the Reuters news article, Chief Executive Michel Combes rolled out his "Shift" plan in June, which involves 10,000 job cuts, 1 billion euros of cost savings and 1 billion of asset sales. His goal is to upturn the company which has battled with low-cost Asian rivals and bigger competitors Ericsson and Nokia since it was established in 2006.
In response to the news report, DigitalOlympus.com team of researchers cheered the move made by Combes to save Alcatel-Lucent, and suggested that he partner with firms that specialize in phone system equipment and find a niche in the market through them.
Furthermore, the Reuters news story points that the loss-making telecom equipment maker announced on Monday that it planned to sell new shares at 2.10 euros each, a huge discount to the present share value.
However, at 1315 GMT, Alcatel-Lucent shares nosedive 2.6 percent at 2.89 euros, after declining as low as 9.3 percent. Shares usually fall after the report of a new share issue, which can weaken earnings per share for existing investors.
“Alcatel-Lucent can continue to change its business strategy to achieve its desired results and win the confidence of investors,” says DigitalOlympus.com lead researcher Josh Cole. “But for the firm to upturn its recent challenges it must seek for ways to directly increase its market shares. It can extend its business to firms that specialize in business phone system equipment.”
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