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Alcatel Lucent SA (ADR)(NYSE:ALU), Exxon Mobil Corporation(NYSE:XOM) Are Top Stocks to Watch

Though Alcatel Lucent SA (ADR)(NYSE:ALU) Q3 revenue only grew 1.9% Y/Y (a growth rate that matches Q2′s), job cuts helped the company’s gross margin rise 480 bps Y/Y to 32.6%. A 5% Y/Y drop in SG&A spend to €514M, and a 3% drop in R&D to €566M, also bolstered Alcatel’s bottom line.Q3 free cash flow was still -€218M, though that figure is better than the year-ago period’s -€366M. Net debt rose to €1.004B from €794M at the end of Q2 and €58M a year ago.

A mix shift towards higher-margin router and mobile infrastructure sales also boosted Alcatel’s gross margin. Router sales +7% Y/Y to €580M, wireless access +13% to €1.2B. On the other hand, fixed access (broadband equipment) sales only rose 0.7%, optical transport sales fell 1.8%, and IP platform (carrier software) sales fell 3.6%. Managed services, a low-margin business Alcatel has been cutting its exposure to, fell 28%.North American sales, lifted by strong orders from U.S. mobile carriers, rose 14% Y/Y. Asia-Pac fell 11%, and Europe rose 4%.Alcatel claims four more customer wins for its 7950 XRS core router, launched last year to much fanfare, raising the total to 14.

LTE equipment sales more than doubled Y/Y, providing a lift to wireless access. 2G/3G equipment sales -5% at constant currency.Andrew Schmitt points out Alcatel is upbeat about year-end capex, something that contrasts starkly with remarks from other vendors.

Iraqi Kurdistan plans to build a second new oil export pipeline to Turkey within the next two years as it ramps up output independently of Baghdad, its natural resources minister says.Kurdistan will track the volumes of its rising crude exports on the pipeline independently of the central government, Minister Ashti Hawrami says, adding that “nowhere in the world can 1M barrels per day remain stranded forever, so the oil export is a reality.”The central government’s anger hasn’t stopped Kurdistan from signing deals with producers including giants such as Exxon (XOM) and Chevron (CVX), as well as wildcatters like Genel Energy, the Turkish firm run by former BP chief Tony Hayward (GEGYF).



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