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Lucent Merger...

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Uzo

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Jul 30, 2002
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Question,

should I hold or sell Lucent stock based on the merger. This stock has a good run the last week or two and I'm close to even on it...made a bad call when I bought it but have recouped my losses on it...


As to this comment on reuters newswire: "As part of the deal, Lucent shareholders will receive 0.1952 of an ADS (American Depositary Share) representing ordinary shares of Alcatel for every common share of Lucent that they currently hold."



Should I hold it for the converson of the shares or just sell??
 
Sell...

...sell now.

There is no telecom equipment stock worth owning. Even Cisco comes with lots of risk.

The customers are consolidating and drving down prices while asking for higher and higher capacity equipment. While wireless networks are being built (and re built) all over the world, the margin is so low thanks to players like Huawei in China that NOBODY makes real money on this stuff.

I am involved in a deal right now where my client took one of the major telecom equipment players to the CLEANERS...simply because they could. They (the supplier) will lose MILLIONS...and another infrastructure player eagerly stepped in just to have the market share and my client on their reference list...while the first guy limps off with a smile on their face because they know they can't afford to burn the bridge.

If you somehow managed to make a couple dollars on a price bump consider yourself lucky, now take your profits and run...

You have been warned...
 
I agree. Telco's in general have yet to adjust to reality. Equipment itself should be cheap and no one (consumers & big biz) wants to pay for network usage. The days of being able to charge businesses many thousands per month for a data connection are going away rapidly. The consumer side of voice communications is going to lose out big when VoIP really takes hold.
 
personal opinon but before the conception of avia Luecent was solid as a spin off of ATT

But now it is at best a dog
 
Analysts are mixed on this one.

It really depends on your situation.

Some say it's merger or equal, others a buyout.

Some say take your $ and run, as merger talk failed before & culture clash.

Some are semi-upbeat.
http://money.cnn.com/2006/03/24/news/international/lucent_alcatel.reut/index.htm

Long term, others are banking on trends in Europe, high speed internet & media convergence. CDMA & GSM be one? But culture issues and can you wait?
http://www.globeinvestor.com/servle...4394980_RTRIDST_0_BUSINESS-LUCENT-ALCATEL-COL
 
Thanks guys. I'm sitting on 3000 shares of LU and was leaning to sell and see what happens in the coming months after the merger...but if I hold, I have a 0.6 share - what does that mean? Do they round up to one share or round down and I lose a share if I held out for the merger?

I am waiting to place an order to sell until I can see some pre-market activity closer to the open of Monday's trading...

I was certainly hoping that the price point for LU shares was higher than Friday's close price but I guess I should be happy that I didnt have to write off my investment and can walk away even...


I'm not desperate to sell by any means, but at the same time dont want LU shares to be at their peak again before the mass sell-off takes place...I wish the markets were trading today :(
 
Uzo said:
I have a 0.6 share - what does that mean? Do they round up to one share or round down and I lose a share if I held out for the merger?
Click to expand...

Not to be glib, but it means exactly that. If one share is worth $10 then your holdings are worth $6.

There will be no rounding in either direction. You will get exactly 0.6 (60%).
 
As the telecom suppliers merge, the result will be less competition in the market place and hence higher profit margins.

Look for Lucent to merge with Alcatel

and Nortel to merge with Cisco.

Where there were four, now there will be two.
 
Ericsson Nortel

"The new company will have annual sales of $25 billion (21 billion euros) -- ahead of LM Ericsson's $19.9 billion (16.4 billion euros) -- and an 18 percent share of the fiercely competitive market for telecom gear."
 
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