.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:

Dear W.P.:

Alcatel Alsthom, a leading French manufacturer of telecom equipment, went public in mid-1992 at $23.25 per American Depositary Receipt and was listed on the New York Stock Exchange. Fourteen years later (2006), after the high-tech blowout, it acquired Lucent Technologies in an all-stock deal and the new company was called Alcatel-Lucent.

Lucent was a spinoff from American Telephone & Telegraph that in the late 1990s and 2002 was one of the loveliest darlings of Wall Street, trading in the mid $80s. In fact, the last few years of Lucent’s trading cycle were sort of like peaches and gravy.

Both companies design and produce telecommunications, Internet, networking and optics products and service. Alcatel-Lucent (ALU-$4.08) with $22 billion in revenues and 90,000 employees, generates 70 percent of its revenues outside of North America. And many observers believe that ALU’s revenues and income should improve as businesses upgrade their communications networks to accommodate new services and as emerging economies begin to invest more money in their communications infrastructures.

Certainly ALU’s shares are not fit for orphans, widows or children of widows. Although Barclays Capital and Robert Barid & Co have a “buy” stamp on ALU, and Value Line believes ALU can be a $14 stock in a few years, I’m compelled to tell you that ALU is an issue best owned by riverboat gamblers, commodity speculators, rodeo cowboys and trapeze artists.

However, I’m willing to take a gamble for several reasons. ALU’s new CEO, Ben Verwaayen, could be the long-missing perfect fit to run this company. I’m impressed with this fellow, who is credited with rescuing BT Global (British Telecom) from the ashes. BT now trades at $21, has $31 million in revenues and is on track to earn $1.80 in 2009 and possibly $2.55 next year. So I’d be willing to take a chance because this new CEO seems to have the “right stuff.”

ALU’s Service Group continues to grow and generate higher profits. And as network management continues to become even more complex, demand for ALU’s technical assistance will continue to grow. And I’d own the stock because ALU’s partnership with Shanghai-Bell and Taco Bell will gain a stronger presence in Asia and Mexico. I’d own the shares because Verwaayen has generated cost savings that have resulted in a 4 percent decline in selling general and administrative expenses with other planned cost reductions in the works. And I’d own the stock because ALU should be profitable in 2010.

However, if you wish to reduce your risks, consider the Lucent 7.75 percent convertible preferred shares (LUTHP-$735) with a 10.6 percent current return. This preferred is rated B- by Standard & Poor’s, has a $1,000 par value and is convertible into 40.3 shares of ALU common stock. This preferred matures at $1,000 in March of 2017, which is less than eight years from now, and it would be nice to earn 13 percent to maturity.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service