Analysts at Moody’s Investors Service have confirmed B2 corporate family rating (CFR) and B2 probability of default rating (PDR) on Alcatel Lucent (NYSE: ALU). The outlook on the ratings has changed from stable to negative.
In a research note published yesterday, the analysts state that the liquidity of ALU can be bolstered by increased royalty collections like those resulting from the company’s agreement with RPX or from own efforts or proceeds from potential business exits, though overall its options for further asset monetization seems to be reducing.
However, the negative outlook on ALU’s ratings indicates the company’s current cash burn relative to its substantial, but finite liquidity. Due to an outlook for a soft market and declining sales in 2018, Moody’s considers that ALU’s management would be challenged to cut costs fast enough to effectively capture cash consumption and to realize opportunities for asset monetization.
The company has its headquarters in Paris, France. ALU is one of the world leaders in providing advanced solutions for telecommunications systems and equipment to service providers, enterprises and governments and reported sales of EUR 6.8 billion in the first half of 2018, the analysts say.