Alcoa & Lucent
Alcoa had a record quarter
* Revenues up 19% but missed expectations by 2%+ ($18M on $8B)
* Earnings were up 52% Y/Y
The stock fell because of concerns over future aluminum price weakness.
Some analysts believe that this is seasonal weakness - cars aren't being built in the European summertime.
What is most notable is that airplane construction is responsible for the strong boost to AA sales.
I would also point out that earnings up 52% is a powerful counter to anyone suspecting that the economy is slowing down. Granted, some of this growth comes from efficiency gains, but it still shows a strong economy
Lucent screws up
I think the best thing to do is to quote the article from Marketwatch http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BA3E2DDF1%2D52A4%2D4B04%2DB748%2DD74732C88016%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo
"Lucent's latest troubles stem from lower sales in China and a hiccup in demand for next-generation wireless gear in the U.S., analysts said. They cited order delays by Verizon Wireless, Sprint Nextel Corp. and perhaps Cingular Wireless as culprits. Verizon and Sprint alone combine for nearly two-thirds of Lucent's wireless revenue, the brokerage Robert W. Baird estimated.
Slower growth in wireless is compounded by Lucent's difficulties in the wire-line equipment market. Sales in that segment have declined sharply in recent years as carriers divert spending from traditional circuit-based equipment to new Internet-based gear, an area in which Lucent is weak."
The degree of ugliness is severe:
* Revenues projected to be down 13% Y/Y
* Revenues are $300M lower than expected two months ago.
What this means is that LU is a casualty of the Telecoms war. Recall that Alcatel is buying LU and Alcatel has the wireless gear LU is missing.
The US telecoms mergers have led to a series of mergers by suppliers.
Alcatel+Lucent
Nokia+Siemens
The LU/Alcatel merger is a dumb merger, imho. Not only are the cultures incompatible, the technologies are as well.
Nevertheless, the market is panicking at these earnings misses. Needlessly upset, in my opinion.
1. Alcoa shows the strong economy continues - a 19% increase in revenue is a bold jump
2. Lucent is an isolated event - nobody believes in LU's future
-------------------------
Note: I am employed by Cisco and can not comment on Cisco. Anything I have said is from the public domain and not part of some insider knowledge
* Revenues up 19% but missed expectations by 2%+ ($18M on $8B)
* Earnings were up 52% Y/Y
The stock fell because of concerns over future aluminum price weakness.
Some analysts believe that this is seasonal weakness - cars aren't being built in the European summertime.
What is most notable is that airplane construction is responsible for the strong boost to AA sales.
I would also point out that earnings up 52% is a powerful counter to anyone suspecting that the economy is slowing down. Granted, some of this growth comes from efficiency gains, but it still shows a strong economy
Lucent screws up
I think the best thing to do is to quote the article from Marketwatch http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BA3E2DDF1%2D52A4%2D4B04%2DB748%2DD74732C88016%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo
"Lucent's latest troubles stem from lower sales in China and a hiccup in demand for next-generation wireless gear in the U.S., analysts said. They cited order delays by Verizon Wireless, Sprint Nextel Corp. and perhaps Cingular Wireless as culprits. Verizon and Sprint alone combine for nearly two-thirds of Lucent's wireless revenue, the brokerage Robert W. Baird estimated.
Slower growth in wireless is compounded by Lucent's difficulties in the wire-line equipment market. Sales in that segment have declined sharply in recent years as carriers divert spending from traditional circuit-based equipment to new Internet-based gear, an area in which Lucent is weak."
The degree of ugliness is severe:
* Revenues projected to be down 13% Y/Y
* Revenues are $300M lower than expected two months ago.
What this means is that LU is a casualty of the Telecoms war. Recall that Alcatel is buying LU and Alcatel has the wireless gear LU is missing.
The US telecoms mergers have led to a series of mergers by suppliers.
Alcatel+Lucent
Nokia+Siemens
The LU/Alcatel merger is a dumb merger, imho. Not only are the cultures incompatible, the technologies are as well.
Nevertheless, the market is panicking at these earnings misses. Needlessly upset, in my opinion.
1. Alcoa shows the strong economy continues - a 19% increase in revenue is a bold jump
2. Lucent is an isolated event - nobody believes in LU's future
-------------------------
Note: I am employed by Cisco and can not comment on Cisco. Anything I have said is from the public domain and not part of some insider knowledge
posted by Andrew at
10:45 AM
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