Alcatel-Lucent (ALU) entered into a lawsuit settlement with the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). The company had been charged for violating the Foreign Corrupt Practices Act.
The SEC accused the company of paying bribes to win contracts in Latin America and Asia and has been charged a penalty of $137 million, of which $92 million is for criminal charges and $45 million to settle civil charges.
The company has agreed to the charges made against it and assured of implementing its policies and procedures in such a way that such things are not repeated. According to Alcatel-Lucent, the legal charge will not affect its 2010 results as it has already created a provision for it in the fourth quarter of 2009. The company will be filing the final settlement with the U.S. Federal Court in early 2011.
Based in Paris, Alcatel-Lucent is a diversified global manufacturer of telecom equipment with over 77,000 employees in 130 countries worldwide. Apart from being the world’s leading supplier of digital subscriber line (DSL) equipment, Alcatel-Lucent is among the leaders in telephone switching equipment, optical and data networking gear, mobile infrastructure, and communications software. The company has also been a big player in mobile handsets, fiber optic cable, and Internet routers. Major competitors of Alcatel-Lucent are Cisco Systems Inc. (CSCO) and LM Ericsson Telephone Co. (ERIC)
We currently maintain our Neutral rating for the long term on Alcatel-Lucent, with a Zacks #2 Rank (short-term Buy recommendation) over the next one-to-three months.
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