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Alcatel-Lucent swings to loss, sticks to rosy forecast

Fri, 07/30/2010 - 8:25am
Maisie Ramsay, Wireless Week

Alcatel-Lucent swung to a loss in the second quarter as a sales slump in China and Europe failed to offset gains in India, but the company maintained its full-year 2010 forecast.

Sales fell 2 percent to $4.96 billion, resulting in a net loss of $238.3 million, or about 10 cents per share. Last year, the company managed to eke out a profit of $2.6 million.

Alcatel-Lucent has struggled to achieve profitability since the merger of Alcatel and Lucent Technologies in 2006, posting just two quarterly profits since then.

Company CEO Ben Verwaayen said that Alcatel-Lucent was preparing for a strengthened demand in the third and fourth quarters of this year, as evidenced by the company's growing order book. Alcatel-Lucent was recently selected to supply a broadband network in Australia, and AT&T tapped the company as one of its domain suppliers for its LTE network.

Alcatel-Lucent is still grappling with supply constraints that contributed to a $655.3 million loss last quarter after a shortage of electrical components left it unable to meet demand in its networks division.

"As sales trends continue to improve and we continue to see the benefits of our actions on costs, the leverage effect at the operating profit level will be significant," Verwaayen said.

The company reiterated its forecast of nominal full-year growth between 0 percent and 5 percent for telecommunications equipment and services and maintained that its adjusted operating margin for this year will be between 1 percent and 5 percent.

Alcatel-Lucent's shares rose more than 14 percent in mid-morning trading on the New York Stock Exchange.

More Broadband Direct 7/30/10:

•  Technicolor inks MOU with Verizon, lengthens DirecTV agreement
•  AT&T selects Alcatel-Lucent, Cisco and Juniper as domain suppliers
•  MaxLinear chips supercharge Arris D3 gateways
•  Alcatel-Lucent swings to loss, sticks to rosy forecast
•  In the media: Panasonic kills tru2way TV
•  Samsung reports strong Q3
•  Ballmer: Tablet coming 'as soon as we can'
•  Australia govt expands proposed broadband network
•  Broadband Briefs for July 30, 2010
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