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

To: twt who wrote (180)	9/17/1998 8:56:00 PM
From: dougjn	Read Replies (1) \| Respond to of 285

That being the case, I withdraw my remarks. Doug

To: twt who wrote (180)	9/17/1998 10:05:00 PM
From: Steve Fancy	Respond to of 285

UPDATE) One Week After Acquisition, France's Alcatel Issues Profit Warning Dow Jones Online News, Thursday, September 17, 1998 at 18:41 NEW YORK -(Dow Jones)- Only a week after it wrapped up a key acquisition in the U.S., French telecommunications-equipment and electronics concern Alcatel SA stunned investors Thursday by warning that earnings this year will come in short of analysts' expectations. Sales for 1998 are expected to rise about 10% and earnings 8%, short of expectations. The company cited reduced spending by telecommunications operators and the financial turmoil in Asia and Russia. The news sent shares of Alcatel (ALA) plummeting in Paris and New York and was blamed for helping fuel stock-market losses across Europe. Traders said the profit warning from Alcatel, one of France's biggest industrial groups, raised worries that investors may have grossly underestimated the impact of the Asian and Russian crises on corporate earnings. First-half net profit rose to 15.2 billion francs ($2.7 billion) from 1.5 billion francs a year ago, but only after tacking on 13.7 billion francs in gains from spinning off its Alsthom SA business. Chairman Serge Tchuruk said that profit from the group's telecom business would fall well shy of expectations. He said, however, that operating profit from those activities would show a gain for the full year comparable with the rise in first-half profit. In the first half, pretax profit in the telecom business rose 33% to 800 million francs. In Paris Thursday, Alcatel's shares plunged 38% in a highly volatile session that saw the French stock market lose 5.5%. On the New York Stock Exchange, Alcatel's American depositary receipts fell $12.063, or 39%, to settle at $19.25. At one point, the ADRs set a new 52-week low at $18.563. Trading volume of 13 million shares was far above the daily average of about 1.2 million and made it one of the Big Board's most-active issues. The rush to dump Alcatel shares in the wake of the profit warning also reflects the fact that the company graced the top-10 recommendation lists of many investment banks in both the U.S. and France at the beginning of the year. "When you have a star like Alcatel that issues a profit warning in the midst of a crisis, the effect is dramatic," said Bruno Eudes, a salesman at the brokerage house Meeschaert-Rousselle in Paris. Tchuruk downplayed rumors of a merger with any other major telecom-equipment supplier, such as Lucent Technologies Inc. "There are rumors that they will take over us, Nokia and (German's) Siemens," the chairman said. "I say bon appetit." He said the company would continue to look for acquisitions in the U.S. particularly in the Internet sector but he said that those acquisitions would be small companies or start-ups with specialized activities. Turning to Alcatel's 44% stake in nuclear power plant manufacturer Framatome SA, Tchuruk repeated Alcatel's long-standing desire to reduce its stake in the company and said that he would try to increase pressure on the French government to allow Alcatel to do so. Alcatel is Framatome's majority shareholder. Just last week, Alcatel wrapped up its acquisition of Texas-based DSC Communications Corp. Some of the newest holders of Alcatel stock have to angry and willing to sue if Alcatel witheld vital information. Alcatel said it noticed that orders were falling short of expectations on Sept. 8, the day the merger closed. The timing of Alcatel's announcement was questioned almost immediately. One analyst suggested that either Alcatel was very disorganized or was lying about only recently learning about the shortfall. On Sept.8, the company realized "orders we previously thought were just to be delayed were turning out to be canceled," the company said. It took the next opportunity to release the news, which was in conjunction with its earnings, Alcatel said. "We have done this in a timely manner." The purchase of DSC almost doubled Alcatel's presence in the U.S. telecom market and accelerated the consolidation of the industry. Alcatel has been repositioning itself as a network company and has announced plans to take control of one of the world's largest satellite companies. At first glance, DSC, a small player with $1.3 billion in revenue last year in an industry increasingly dominated by giants, was anything but an attractive purchase. DSC announced earlier this year unexpected losses of $30.1 million for the first quarter and its chief executive retired amid doubts on Wall Street about management's abilities. Alcatel has a substantial share of long-distance digital transmission equipment sales in the U.S. and has been trying to move into local markets through the sale to regional Baby Bell networks of its ADSL equipment - technology that allows consumers to dial up the Internet on conventional lines at speeds that are faster than many corporate networks. Copyright (c) 1998 Dow Jones & Company, Inc. All Rights Reserved.