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This morning, Alcatel-Lucent (NYSE: ALU) reported its first-ever quarterly net profit, sparking a flurry of activity in the firm's stock. In the latest quarter, ALU earned $2.8 million, or 0.01 euro per share. The Street expected ALU to lose 0.08 euro per share during the quarter.
This news is all well and good, but adjusted earnings showed a loss of 62 million euros compared to expectations for a loss of 36 million euros. Nevertheless, the stock traded higher in post-market trading and also opened higher this morning.
No matter what the day's trading holds for ALU, it will still be trading in the $2-to-$3 region. The shares are stuck below their 10-month moving average, which has provided resistance since the middle of 2007. Yes, there is potential support in place from its 10- and 20-week trendlines, but the long-term pressure may be more than the stock can overcome.
Given the fact that analysts believe the company will turn back to its losing ways in the next quarter, I wouldn't look for the stock to take off any time soon. It certainly appears that ALU will continue bouncing around in the $2 region, as it has since April. The big problem for the stock is that it had to rally in order to achieve its current price. Can the stock rally through the overhead resistance? Perhaps, but it is far more likely that it will continue its sideways trend.
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