Alcatel-Lucent (ALU) Shares Surge On Nokia (NOK) Speculation

Alcatel-Lucent (ALU) shares are trading higher by nearly 13% to $4.91 after the company confirmed Tuesday it is in advanced talks with Nokia (NOK) “with respect to a potential full combination, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent.”

The two companies, which have been seen as a possible combination for the last several years, cautioned there could be “no certainty at this stage” that the discussions would result in a deal.

The news comes a year after Nokia completed a $7.2 billion deal to sell its struggling handset business to Microsoft (MSFT).

During today’s trading session, shares of Alcatel-Lucent opened sharply higher, printing an intraday and 52-week high of $4.93. About 69 million shares were traded by 2.20 p.m. EDT Monday, above the company’s average trading volume of about 7.1 million shares a day.

Fundamentally, ALU shows the following financial data:

  • $5.92 billion in cash in most recent quarter
  • $21.46 billion t-12 total assets
  • $2.69 billion total equity
  • $14.06 billion t-12 revenue
  • ($69 million) annual net income
  • ($429 million) free cash flow

On valuation measures, Alcatel-Lucent ADS shares have a T-12 price/sales ratio of 0.86 and a price/book for the same period of 6.09. EPS is ($0.06). The name has a market cap of $12.02 billion and a median Wall Street price target of $4.46 with a high target of $5.11. Currently there are 15 analysts that rate ALU a ‘Buy’, 8 rate it a ‘Hold’. 1 analyst rates it a ‘Sell’.

Shares of Boulogne-Billancourt, France-based telecom equipment maker are up 14.17% year-over-year and 22.54% year-to-date.

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