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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (1859)	5/26/2000 7:48:00 PM
From: Steve Fancy	Respond to of 3891

Alcatel Sets Stock Target After Newbridge Purchase May 26, 2000 Filed at 6:13 p.m. ET By Reuters OTTAWA (Reuters) - The chief executive of Alcatel (CGEP.PA), fresh from wrapping up the acquisition of Canada's Newbridge Networks Corp., said on Friday he has now set his sights on doubling the share price of the French telecommunications equipment firm. Serge Tchuruk said in a speech that data communication equipment from Newbridge will play a key role in the company's market push. Tchuruk would not predict exactly when Alcatel stock will hit his lofty target, but told Reuters that it should double within three years. ``When I compare Alcatel to the Nortels (Nortel Networks Corp. (NT.TO) (NT.N) or the Lucents (Lucent Technologies Inc. (LU.N)), which are about more or less the same size...we are still a long way,'' Tchuruk told a group of high-tech executives. ``The next phase in our ambition is to bring ourselves up to their level...We should aim at doubling, if not more, our share price. That's our next challenge.'' Alcatel shares ended trade at 49 on New York on Friday, a gain of 2-5/8, compared with Nortel's New York closing price of 51-15/16 and Lucent's 56. Shares of Cisco Systems Inc. (CSCO.O) were trading at 54-15/16 on Nasdaq. Alcatel has been on an aggressive North American expansion, spending $17 billion to buy seven firms including Newbridge, a transaction valued at $7.1 billion when announced in February. Alcatel suffers from a lower valuation than its counterparts, Tchuruk said, because it is not yet considered a telecoms ``pure play'' by the market. That is expected to change when the company launches its cable business initial public offering within the next few months. Alcatel must also demonstrate it can outperform market growth estimates of 20 percent and improve its return on sales, he said. ``By the very fact of IPOing the cable business and integrating Newbridge, this is going to bring mechanically seven points in growth,'' he told Reuters. Alcatel has said it expects its revenues to grow 30 percent in fiscal 2000 and its operating profit to rise 60 percent. Tchuruk was in Ottawa to meet with Newbridge staff and executives, following the approval of Alcatel's acquisition of Newbridge on Thursday. The takeover plays a key role in Alcatel's push into the burgeoning U.S. market. Alcatel expects annual U.S. sales of about $6 billion to grow to C$10 billion in two years. ``What we have decided is to use Newbridge as the building block -- the base of our next generation network business,'' Tchuruk said. ``Canada is going to play a much more important role in the framework of the Alcatel strategy.'' Alcatel now has about 4,600 staff in Canada, but could shed 1,000 when its cable business is parceled out. Newbridge founder Terry Matthews -- widely regarded as a reluctant seller of the company -- did not attend the speech, but Tchuruk said Matthews will sit on an advisory council for Alcatel. Alcatel also forecasts growth from its wireless market. The company expects to finalize a joint venture with Japan's Fujitsu within weeks, to pursue the mobile Internet market. Tchuruk said key European contracts should materialize over the next 12 months.