SOURCE: Five Star Equities

Five Star Equities

October 11, 2012 08:20 ET

Alcatel Lucent and JDS Uniphase Look to Benefit as Huawei and ZTE Blocked From Expanding Into the U.S.

Five Star Equities Provides Stock Research on Alcatel Lucent and JDS Uniphase

NEW YORK, NY--(Marketwire - Oct 11, 2012) - The Communication Equipment Industry will look to benefit from a recent ruling by the United States House Intelligence Committee disallowing Huawei and ZTE Corporation, China's leading telecom equipment producers, from the domestic telecom equipment market due to potential security issues. Five Star Equities examines the outlook for companies in the Communication Equipment Industry and provides equity research on Alcatel Lucent SA (NYSE: ALU) and JDS Uniphase Corp. (NASDAQ: JDSU).

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A report from the House intelligence Committee suggests that the U.S. government should prevent acquisitions or mergers by Huawei and ZTE, and government agencies and contractors should cease using equipment made by the companies. It has yet to be seen if this report will have effect on Huawei and ZTE business in other countries.

"Huawei and ZTE seek to expand in the United States, but as a result of our investigation, we do not have the confidence that these two companies with their ties to the Chinese government can be trusted with infrastructure of such critical importance," the committee's chairman, Michigan Republican Mike Rogers, said.

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Alcatel-Lucent shares hit a 23-year low in Paris Tuesday on concerns regarding the company's turnaround plan. Credit Suisse Group AG reiterated its underperform rating and stated that unfavorable trends will likely continue on in the third quarter. "The competition in the industry is extremely rough as rivals in China and other countries produce at lower cost levels," said Mirko Maier, an analyst at LBBW.

JDS Uniphase innovates and collaborates with customers to build and operate the highest-performing and highest-value networks in the world. The company recently highlighted key fiber optic and 100G technology at the annual European Conference and Exhibition on Optical Communications (ECOC) 2012. "Network equipment manufacturers are focused on finding ways to win in the market while remaining competitive. They have to constantly innovate and also make a profit -- it's not an easy task," said Andrea Milani, director of EMEA Sales at JDSU.

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