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Alcatel-Lucent Investors Should Be Excited About These Numbers

Alcatel-Lucent (ALU) grew its IP routing business faster in Q4 than anyone expected, as it saw revenue growth of 15% despite currency headwinds. Over the last two years, I have discussed in detail how Alcatel-Lucent is quickly causing headaches for both Cisco (CSCO) and Juniper (JNPR) in the high-margin IP routing space, and it seems that investors can expect more of the same in 2015.

IP routing accounts for about 20% of Alcatel-Lucent's total revenue, and the overwhelming majority of its operating income. The company reports IP routing within its core networking segment - IP routing revenue accounts for half of its core networking revenue. During 2014 Alcatel created $6.7 billion in revenue from core networking, and because of IP routing, the segment had an operating margin of 10.6%.

Looking ahead, Alcatel-Lucent expects revenue of $7.9 billion from core networking with an operating margin of 12.5%. Chances are, it's not… Read More …