Alcatel Lucent SA (ADR) (ALU), T MOBILE US INC (TMUS): Why This Deal Is So Important

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Will Alcatel make it?
In response to years of poor performance, Alcatel Lucent SA (ADR) (NYSE:ALU) introduced a three-year turnaround plan, which includes cutting costs and focusing mainly on its core networking business, among other initiatives. This strategy makes sense, since Alcatel already has a strong foothold in the edge router market.

On the LTE front, besides the contract with Telefonica S.A. (ADR) (NYSE:TEF), the equipment vendor recently grabbed a 13% share of China Mobile Ltd. (ADR) (NYSE:CHL)‘s $3.26 billion of base-station supply contracts. That’s higher than what Ericsson and NSN got.

Also, it’s teaming up with chipmaker QUALCOMM, Inc. (NASDAQ:QCOM) to develop mobile, “small-cell” technology, aiming at cashing in on operators’ growing appetite for mobile data capacity.

These deals help paint a brighter picture for its future.

The takeaway
A turnaround doesn’t happen overnight. Alcatel Lucent SA (ADR) (NYSE:ALU) still has a long way before it can exit its doldrums.

Investors should stand pat on the stock and wait until Alcatel Lucent SA (ADR) (NYSE:ALU) shows signs of margin gains and positive free cash flow.

The article Is This Contract a Game-Changer for Alcatel-Lucent? originally appeared on Fool.com.

Fani Kelesidou has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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