Alcatel-Lucent shares fall on downgrade

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SAN FRANCISCO (AP) — Alcatel-Lucent SA shares sank Wednesday after a Jefferies & Co. downgrade. A Jefferies analyst said that a possible sale of Alcatel-Lucent’s Genesys software business — an offer for which was announced after the analyst’s note was released — has already been priced in. The analyst also expects revenue from one of Alcatel-Lucent’s profitable wireless product lines will fall next year.

THE SPARK: Early Wednesday, European private equity firm Permira said it offered to buy Genesys from the French-U.S. telecommunications networking technology company in a deal valued at $1.5 billion.

In a client note released before the offer was announced, Jefferies analyst George Notter downgraded Alcatel-Lucent’s stock to “Underperform” from “Buy,” saying that a sale of Genesys — which has been expected — is already factored into Alcatel-Lucent’s stock.

Notter also said that he expects the company’s “very profitable” EVDO Rev A software revenue will slow down in 2012.

“Looking into 2012, we expect that mobile data growth will increasingly come into the network in the form of LTE,” he said, referring to the high-speed wireless technology that is emerging as the industry standard. “The Street underappreciates the impact these upgrades have had on the financial model,” he said.

Notter added that he’s concerned that Alcatel-Lucent will be hurt by weaker demand for capital expenditures — especially in North America, which he thinks makes up about 35 to 40 percent of Alcatel-Lucent’s total sales.

An Alcatel-Lucent spokesman said the company does not comment on stock movement.

SHARE ACTION: U.S.-traded shares of Alcatel-Lucent fell 36 cents, or 12.2 percent, to close at $2.58, near its 52-week low of $2.25.