Alcatel Lucent SA (ADR) (ALU): A Minnow in a Pond of Sharks

While the major rival of Alcatel-Lucent is still Cisco Systems, Inc. (NASDAQ:CSCO), Ericsson also needs be taken into account, as these businesses keep adapting to the evolution of smart devices. Because there are so many smart devices now, there’s a big opportunity for some rival companies to succeed. According to Ericsson (ADR) (NASDAQ:ERIC)’s forecast in its Mobility Report of June 2013, subscriptions to such devices will multiply three times by 2018 as compared to 2012, bringing the number of smartphone subscribers from 1.2 billion in 2012 to approximately 4.5 billion in 2018.

Conversely, Cisco Systems, Inc. (NASDAQ:CSCO) has been acquiring several smaller businesses, concentrating on those that are creating 4G LTE networks since it wants to beat its rivals in this market. 4G LTE provides high-speed information and broadband connections utilized by cell phone technology and data terminals. Broadband and network businesses are continuing to expand with such high-speed networks to keep up with the demand for smartphone technology.

In an attempt to have an advantage in 4G LTE over its competitors, Cisco Systems, Inc. (NASDAQ:CSCO) acquired BroadHop on January 15. The policy control solutions of BroadHop, which have been distributed across many regions for both fixed and mobile networks, will now become the company standard.

The restructuring and refocusing of Alcatel Lucent SA (ADR) (NYSE:ALU) will ensure its survival and takes it off life support. In the face of competition with very big fish, it is far from being a company to invest in to make fast gains. Recovery from the brink will take time (don’t expect a $14 share price ever again, but don’t expect investors to lose what they have in it already). Bankruptcy isn’t likely now, nor should one expect it to be a major player again any time soon.

The article Alcatel Lucent: A Minnow in a Pond of Sharks originally appeared on Fool.com and is written by Mandy Seay.

Mandy Seay has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mandy is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.