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

To: bertrand bidaud who wrote (556)	3/20/1999 12:07:00 PM
From: Steve Fancy	Respond to of 3891

WSJE: Cebit Tech Fair: Data Networking For Alcatel Grows Dow Jones Newswires -- March 18, 1999 By Kevin J. Delaney Staff Reporter HANNOVER, Germany -- The chief executive officer of Alcatel SA says the company will hit one billion euros ($1.1 billion) in sales of data-networking equipment to carriers next year, and is considering acquiring small network-software companies. In an interview at the CeBIT show here, Serge Tchuruk, the French telecommunications-equipment maker's CEO, highlighted the growing importance of data-networking to Alcatel and suggested the company is open to shedding additional noncore assets. The comments come in the wake of Alcatel's agreements since last summer to buy U.S. networking and telecom-equipment companies valued at a total of more than $5 billion, including the $2 billion purchase of Xylan Corp. and the $350 million purchase of Assured Access Technology Inc., announced earlier this month. Mr. Tchuruk said the main wave of acquisitions is over and that Alcatel must now begin focusing on marketing its expanded portfolio of products. "Everything hinges now on execution," he said, adding that the company is making a strong effort to sign up high-profile customers, especially in the U.S. Analysts said marketing is precisely where Alcatel should be focusing, and gave Mr. Tchuruk credit for beginning the process. "It's very clear; Tchuruk is putting pressure on the management to be more aggressive on the marketing side," said Sophie de Behogne, analyst at Fimagest in Paris. She said Alcatel currently has a "very bad brand image," and that it will take five months before any progress is visible. While Mr. Tchuruk said acquisitions aren't a major focus, he said Alcatel is interested in boosting its newly created networking-application-software division and is considering buying small companies to do that. The application-software area -- which includes software that runs so-called smart networks and Internet Protocol, or IP, applications and handles tasks such as customer billing -- should grow 20% to 25% annually, according to Mr. Tchuruk. He said Alcatel evaluated 70 companies in the U.S. and Israel before making its recent acquisitions. Analysts said the one-billion-euro target for data-networking sales to carriers is realistic, given that it includes sales of so-called asymmetrical-digital-subscriber-line, or ADSL, technology that allows high-speed Internet access over conventional telephone lines. Mr. Tchuruk predicted about 300 million euros in ADSL sales this year and double that next year. He said the company will break even on ADSL this year, once it has sold equipment for 400,000 such lines. Alcatel shipped 80,000 of these lines last year and expects to ship another 800,000 in 1999. But even one billion euros in data-networking sales to carriers doesn't signal a significant transition to data, according to analysts. "That's still only about 5% of their revenue. That doesn't make it an IP company yet," said Alexandre Peterc, telecommunications-equipment analyst at CDC Bourse in Paris. Alcatel will also come up against the strong presence of established data-networking players such as Cisco Systems Inc. and Northern Telecom Ltd. -- and Lucent Technologies Inc., with its recent agreement to purchase Ascend Communications Inc. That is especially true for Alcatel's efforts to expand in the U.S. Mr. Tchuruk suggested the company would consider shedding some of its noncore businesses, such as energy-cable manufacturing, where operating profit margins are roughly half Alcatel's 7% target for its telecom division and there is little growth. While energy cables account for roughly 15% of Alcatel revenue, Mr. Tchuruk said, "We are flexible in the future of that business." He added it is "completely surreal" that Alcatel continues to hold a 44% stake in Framatome SA, the French nuclear-construction firm. He said he hopes the sale of that holding -- for which the French government has given its approval -- is completed this year. Responding to speculation that Alcatel will swap that stake for a larger share in French defense electronics maker Thomson-CSF, of which it already owns 16%, Mr. Tchuruk said, "We will study this."

To: bertrand bidaud who wrote (556)	3/20/1999 12:17:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 3891

Interesting stories. Sounds like the buying isn't over yet. Hoping ALA pulls back another point or so and I may pick some options back up. Not sure if ALA has leaps, but if so I may be inclined to go that route. I'll let ya know. And, yes Bertrand, I have some IDTC June calls. Interesting story here...we'll have to see what happens. Also currently in a variety of the individual Brazilian Baby bras and the basket of all, UBB, NVLS, CPQ, ORCL. sf