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Alcatel-Lucent optimistic despite losses

Tue, 05/05/2009 - 8:20am
Maisie Ramsay, Wireless Week

Alcatel-Lucent said it will break even in 2009 despite swinging to a worse-than-expected loss in its first quarter.

The infrastructure giant posted its ninth-straight quarterly loss since the company formed in 2006, losing Euro 402 million compared with Euro 181 million in the same quarter last year. Analysts’ estimates compiled by Bloomberg predicted a loss of Euro 270.9 million.

Sales also worsened, hitting Euro 3.6 billion compared with Euro 3.86 billion last year.

Using the adjusted operating profit figures preferred by some analysts, the company swung to an adjusted operating loss of Euro 254 million from last year’s operating profit of Euro 36 million. Analysts expected a loss of Euro 143.4 million.

In the wake of the global economic crisis and plummeting demand, the company has struggled to deal with both macroeconomic conditions and ongoing write-downs stemming from its merger.

However, the company got $1.7 billion in Chinese contracts last week and entered into a $500 million joint venture with Indian telecom Bharti Airtel to manage its wireline and broadband networks. Alcatel-Lucent also will close the sale of its stake in Thales to Dassault Aviation for Euro 1.6 billion next quarter.

Although Alcatel-Lucent still expects the global telecom equipment market to be down between 8 percent and 12 percent in 2009, the company expects to break even later this year. The company should complete cost-cutting measures of Euro 750 million by the end of 2009, which should help the company return to an expected net profit during the second half of 2010.

“As we discussed before, 2009 will be a year of transition. We are reshaping the company and aggressively pursuing our product portfolio rationalization, co-sourcing, working capital management and SG&A reduction programs,” said Alcatel-Lucent CEO Ben Verwaayen. “While expected, given seasonality and tough market conditions, we are not pleased with the operating loss incurred in the first quarter. Our guidance for the year remains unchanged and we are taking appropriate actions.”

The company has struggled to overcome ongoing write-downs stemming from its merger and has a post-employment and pension fund deficit of Euro 545 million compared with last quarter’s deficit of Euro 429 million. Alcatel-Lucent’s net debt grew to Euro 841 million compared with Euro 389 million at the end of last year, but Verwaayen insisted the company remained adequately funded and that capital did not need to be raised at this time.

More Broadband Direct 05/05/09:
•  Cox chalks up another DOCSIS 3.0 deployment
•  Mediacom's broadband portal gets a makeover from Synacor
•  RCN's loss narrows in first quarter
•  Harmonic posts loss in Q1; expects full rebound
•  Actiontec enables Ethernet over MoCA, HPNA
•  Entone marries IPTV and OTT
•  Obama's tax plans raise high-tech hackles
•  AT&T: Gaming-changing iPhone only a start
•  Alcatel-Lucent optimistic despite losses
•  Amdocs anticipates a trillion net devices
•  Broadcom launches unsolicited bid for Emulex
•  Study: Web-to-TV video poised for breakout
•  Broadband Briefs for 05/05/09

 

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