Alcatel-Lucent Exhibiting FavorableTendencies
Muhammad is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Currently, the dim macroeconomic environment seems to have weighed in on most industries. The tech industry has not been left out of this equation. There is an inevitable trade-off between fancy gadgets and utilities as more consumers are exhibiting an evident inclination towards necessities.
For Alcatel (NYSE: ALU), things could not get any worse. It not only suffers from reduced demand imposed by economical trends, but also sits at the receiving end of belligerent competitors like Cisco (NASDAQ: CSCO), Ericsson (NASDAQ: ERIC) and Juniper Networks (NYSE: JNPR).
Nonetheless, I am surefooted that it can overcome.
Working double
Alcatel seems to have bolstered its operations in what I would say is a fully-fledged display of tact, aggressiveness and determination. The tech big wig has made it clear that it will make an entrance into the core router market. Here, it will have to battle with the likes of Juniper Networks and Cisco - all of which are domineering forces in the niche. Notwithstanding, its new router has already lured in telecom giant Verizon (NYSE: VZ). This is an early sign that probabilities of its product catching on are at the brim.
Similarly, demand for HD videos and online data has literally gone through the roof following a decrease in the prices of smartphones. This shows that Alcatel’s timing is spot -on.
Evidence on Alcatel’s profound impact on the router business has begun streaming in. Juniper Networks, a key player in the router business, has gone on to increase its TXP multi-chassis capacity. This move is geared towards enhancing scalability. In my opinion, it is timely and carries more motive than mere scalability - it is geared towards suppressing the hype brought about by Alcatel’s forthcoming 7950 XRS core routing system.
Bharti Airtell, an Indian based telecommunication heavyweight, has gone on to give Alcatel an internet Network contract. Airtell is eying to increase its revenue through polishing up and improving its current data services.
The contract, which dictates that Alcatel will build an internet based network protocol, will greatly help Alcatel. Why is this so? Airtell operates in 20 countries in Asia and Africa. This means that it casts its net over emerging markets. Through this deal, Alcatel can get a gateway into potent untapped markets.
It has also been revealed that Alcatel will soon get a platform to stage future advancements in Latin-America. It was selected by America Movil to aid in the provision of 4G infrastructure. In other news, Alcatel has made a 4G LTE agreement between itself and West Central wireless. The agreement shows that Alcatel will be instrumental in helping West Central wireless launch its 4G LTE service in Texas. In both these two cases, no financial details have been disclosed.
In person, I believe that Alcatel is currently aiming to increase its demand which, by the way, is a very good approach. Just look at Google, by merely targeting the masses it has greatly forged a great breed of success for Android. Alcatel is following suit. It is currently targeting new and untapped markets. It is also trying to establish level ground for competing with bigger players. This is evident through its upcoming core routers.
Ericsson is watching from a distance
Ericsson is still unpredictable. It is watching from a distance. In my line of thought, I am convinced that it is taking note of the prevalent veers in the market before engaging in decisive actions.
Ericsson says that the increasingly cheaper smartphones and tabs spell a bullish theme in the wireless network industry. It quotes that 40% of all mobile phones sales in the first quarter of this year were smartphones. This tramples on the 30% figure sales of smartphones for the whole of last year. Johan wibergh, head at network business unit, said that the advancement in mobile data greatly heightens the opportunity at Ericsson. It seems as if Ericsson has all the decisive information. Reasons as to why it is not taking progressive action remain shrouded in question marks.
Juniper on the other hand is deluged in adversity and uncertainty. It blames the Wednesday 12-month low in shares on the dim macroeconomic situation- citing that customers are delaying on spending.
Conclusion
The stakes are high. Ericsson has the data but fails to act. In my line of thought, it needs to do something before other financially able players like Cisco steal the show. Juniper, on the other hand, is still waiting for the dust to settle at the wake of a terrible performance.
At the end of the day, it is quite evident that the ball is on Alcatel’s front yard. To the amusement of stakeholders, it is putting on quite a show. Alcatel is a good buy at the moment.
muhammadbazil has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
