Nomura Securities Sees Sector Implications From Alcatel-Lucent's (ALU) Warning; Liquidity Issue Surfaces Too

July 17, 2012 10:00 AM EDT
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Price: $3.46 --0%

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    14 Buy, 7 Hold, 6 Sell

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    Up: 1 | Down: 5 | New: 5
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Nomura Securities maintains a 'Neutral' on Alcatel-Lucent (NYSE: ALU) price target of EUR1.27.

Analyst, Stuart Jeffrey, said, "The scale of Alcatel-Lucent’s Q2 revenue miss is, in our view, not significant (just a 3% miss) nor surprising given pre-announced weakness at Acme Packet (Nasdaq: APKT), Adtran (Nasdaq: ADTN) and Calix (Nasdaq: CALX) as well as weak capex data points out of China and Europe."

Jeffrey points to the real issue being liquidity, with the company having to generate mid-to-high single digit operating margins to have positive cash flow. But, the updated guidance points to struggles reaching that figure. Therefore, liquidity issues are expected to remain in focus. Also, the company has few remaining assets to sell, so longer-term the outlook remains challenging.

The revenue weakness is most likely to have negative implications for Ericsson (Nasdaq: ERIC)(Buy), Juniper (Nasdaq: JNPR)(Neutral) and Nokia Siemens (NYSE: NOK)(Nuetral) (NYSE: SI).

For an analyst ratings summary and ratings history on Alcatel-Lucent click here. For more ratings news on Alcatel-Lucent click here.

Shares of Alcatel-Lucent closed at $1.37 yesterday.

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