Yesterday's announcement that Alcatel had signed a $150 million contract to provide the MAYA 1 submarine network for the Caribbean did not help Alcatel's predicament much. Alcatel will get about 75 percent of the contract value -- the remainder goes to Tyco Submarine Systems. Perhaps it was a mistake to sign the contract in the offshore haven of the Cayman Islands, in the present circumstances. Alcatel's chairman, Serge Tchuruk, persuaded the board on Monday to agree to buy back 10 percent of Alcatel SA's shares after the drop of 38 percent on Thursday. On Monday, the shares were suspended for a time on the Paris Bourse when they dropped more than 10 percent, and finished the day down 8.1 percent. The Bourse regulator has launched an enquiry into Last Thursday's trading in Alcatel, presumably because it suspects insider trading. Tchuruk faces several other problems: a class action suit from DSC Communications shareholders alleges that Alcatel did not present a fair corporate outlook when it agreed a share swap to acquire the DSC. It was hardly diplomatic for Tchuruk to tell Les Echos "There isn't a big financial transaction in the US that doesn't trigger a class action. it's a way for some shareholders to try to get more." Another problem is that Alcatel is vulnerable to a take-over bid, although Tchuruk says he thinks the market overreacted to a slow down, rather than a significant drop in sales. Yesterday, Alcatel shares dropped a further 3.68 percent in New York, and in Paris this morning they were up FF18 to FF532 at 10am. This is some way off the 1998 high of FF1425. ®