Investors gushed over news from BP (BP) that the company had made a "giant oil discovery" at a deepwater site in the Gulf of Mexico. Shares were up 4% in Wednesday morning trading.

These material discoveries, together with our industry leading acreage position, support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade," Andy Inglis, chief executive of exploration and production said in a company statement.

Industry experts said the find could be as large as 3 billion barrels and that BP, already the largest producer in the Gulf of Mexico, could boost its daily output by 50 percent to 600,000 barrels a day by 2020.

While the discovery was welcome news, analysts said its benefits were limited. "The resource base of the company is an important factor in determining the condition of [BP]," says Macquarie Research analyst Jason Gammel. "But there are a lot of other things going on there. There's really not enough detail at this point" to assess the longer-term impact on so large and complex a company, he says.

Mike Rothman, president of Cornerstone Analytics, a boutique energy research firm, says BP has had some lean years on the discovery front, but also that this field is far smaller than recent finds by Brazil's Petroleo Brasiliero (PBR), whose subsalt field could yield tens of billions of barrels. "Three billion is a big number for BP, and it's probably very welcome news. It matters that it happened," he says. "Does it matter for global energy markets? It's not a game-changer."

Bottom Line: Hold
This short-term pop should be gauged against falling oil prices and the long-term decline of BP's stock, which like other major producers, has declined about a third since the oil price spike of spring 2008.

Investors Hung Up over Telecom Bond Deal

Shares of Alcatel-Lucent (ALU) fell nearly 7% Wednesday morning after the telecom company announced a convertible bond offering and investors worried that the move would dilute the value of their existing shares.

Under the deal, the company could issue at least 870 million ($1.24 billion) in bonds but pay back investors with stock shares. Credit Suisse on Tuesday downgraded the stock to Neutral from Buy, while other analysts expressed concern about the revised deal. "This is really about the effects of dilution," ACI analyst Edward Zabitsky says. He downgraded the stock to Hold from Buy last week, highlighting the industry's broader difficulties in developing and selling the next generation of all-packet wireless networks.

"The industry itself is in a down cycle," he says. "It's not just related to the economy, but is related to the move to the next generation of equipment. When they know the next thing is coming, customers tend to purchase less of the existing stuff." Zabitsky says the company is in relatively good shape in terms of market share, but the cyclical change will have a dragging influence through the industry.

The firm last week signed a contract for wireless service routers with China Telecom (CHA), part of a $700 million agreement that will see its equipment used in a 10-privnce network. The news prompted a rare double upgrade of the stock from Natixis, which on Aug. 26 boosted its rating to Buy from Reduce, based largely on the company's strong performance in China, as well as the final stages of integrating Lucent. Alcatel and Lucent merged in 2006 in a $13.4 billion deal. The integration of the two firms has had rocky results and thrashed the stock, which has lost more than 50% since the merger.

Bottom Line: Hold
This is a long, slow climb back for Alcatel-Lucent, and investors who've already shown patience will still have to hang on.