Are These Alcatel-Lucent Upgrades a Sign of Life?
After coming close to bankruptcy, Alcatel-Lucent (NYSE:ALU) announced a debt refinancing deal last week that has breathed new life into the company; its stock is trading above its 10-day, 50-day, and 100-day moving averages, and Alcatel shares received two analysts upgrades on Monday.
Alcatel-Lucent’s recovery begins:
Alcatel-Lucent has seen its business falter as global telecom operators spend less on network equipment and competition increases from its Chinese rivals. As a result the company has developed an average annual cash burn of approximately $927 million. While the Chief Executive Ben Verwaayen has taken severe cost cutting measures this year, the company still burned through $386.5 million its most-recently-reported quarter, causing doubts about the company’s future profitability.
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But on December 14, telecom equipment maker announced that it had secured a $2.1 billion financing deal, underwritten by Goldman Sachs (NYSE:GS) and Credit Suisse (NYSE:CS), that could give the company enough funds to stage turnaround.
Since the deal was made public, shares have risen close to 35 percent. On Wednesday, shares closed at $1.45.