Alcatel-Lucent sees loss, uncertain 2008
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Telecommunication equipment titan Alcatel-Lucent sees global economic woes causing it uncertainty in 2008 after the newly merged company survived a choppy 2007, reporting a fourth-quarter loss Friday and scrapping its dividend for last year.
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Newly merged telecommunications equipment maker Alcatel-Lucent has reported a slump in underlying profits last year and ramped up planned job cuts to 12,500 or 15.6 percent of its global workforce.
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Alcatel-Lucent  gave a weak outlook for 2008 and scrapped its dividend after posting a net loss of 3.5 billion euros ($5.12 billion) for its first year as a merged entity.
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(InfoWorld) - Alcatel-Lucent's revenue fell for the fourth quarter and the company plunged into loss. The performance was disappointing, but theÂ long-term prospects of the mergerÂ of Alcatel and Lucent Technologies remain positive, the company said. Fourth-quarter revenue dropped 16 percent year-on-year on a comparable basis, to â¬4.42 billion ($5.83 billion as of Dec. 31, the last day of the period reported) from â¬5.25 billion, while revenue for the full year fell to â¬18.25 billion from â¬18.57 billion. Although the merger was onlyÂ completed at the end of November, the company provided pro-forma figures as if the merger had taken place on Jan. 1, and restated earlier figures on a comparable basis. On that basis, the company made a net loss of â¬618 million in the fourth quarter, compared to a net profit of â¬381 million a year earlier. For the full year, net profit fell to â¬522 million, down from â¬1.67 billion on a comparable basis the previous year. The disappointing performance was due to uncertainty among customers and staff about the outcome of the merger, and to a highly competitive market in North America during the fourth quarter, the company said. As it proceeds with the integration of Alcatel and Lucent, the company expects to realize cost savings of â¬600 million this year, and a total of â¬1.7 billion in cost savings within three years of the merger. The savings will come from optimization of its supply chain, and the elimination of duplicate resources and products, and around 12,500 jobs. Post-merger, the company makes around three-quarters of its revenue from carrier products. Revenue of â¬1.47 billion came from fixed-line telecommunications equipment in the fourth quarter, â¬1.24 billion from wireless equipment, and â¬510 million from converged products. Enterprise networking equipment accounted for â¬410 million, and services for â¬740 million. Demand was particularly strong for enterprise IP telephony equipment in Europe, the company said.
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Lucent Technologies Inc. LU.N on  Wednesday said quarterly earnings fell by half as increased  sales of wireless network products and services failed to  offset a sharp decline in demand for network gear used by  traditional phone companies.
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Alcatel disputed criticism about its planned takeover of Lucent and insisted that the deal would be good for shareholders.
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Alcatel-Lucent reported higher sales but a net loss for the fourth quarter due to a big writedown in its CDMA (code division multiple access) and IP (Internet protocol) multimedia services businesses.The company said revenue rose 18 percent to &#8364;5.2 billion on the back of strong performance at several of its major business units. But despite the stronger sales the company saw its net profit plunge into the red to the tune of &#8364;2.6 billion. This was largely due to the &#8364;2.5 billion writedown.Its wireline and wireless carrier business was strong and revenues were &#8364;3.7 billion in the quarter against &#8364;3.2 billion during the same period a year earlier. The company benefited from strong growth in carrier-type optical networking, and the GSM (Global System for Mobile Communications) and WCDMA (Wideband CDMA) sectors. Broadband access revenue fell on the back of a decline in the number of DSL lines delivered.Revenues were up 27 percent in the services business to &#8364;1 billion after the company won large network operations contracts and worked on IPTV and IP network integration projects. Its enterprise business segment saw revenues of &#8364;435 million, up about 4 percent, thanks to strong momentum in Europe and Asia.The report came with bad news for investors. The company suspended its dividend payment for 2007 &quot;in the light of these results and or a more uncertain market outlook,&quot; it said.&quot;We just thought very plainly that it was good financial discipline looking at both our net income in &#39;07 and the very tough macroeconomic environment,&quot; said Hubert de Pesquidoux, chief financial officer, on a conference call.CEO Patricia Russo warned that the company doesn&#39;t have a positive short-term outlook, particularly with a looming recession in the U.S. given Alcatel-Lucent&#39;s dependance on business there.&quot;There is a level of uncertainty ... that leaves a lot unknown,&quot; Russo said.Despite interest in IP networking and 3G broadband services, growth over the next year is likely to be flat or just slightly up, Russo said. Taking into account currency differences, the market will likely be down, she said.Some customers are also pursuing network-sharing arrangements, which could affect how much those companies spend on their own infrastructure, she said.Russo defended the&#160;2006 merger of Alcatel and Lucent&#160;and said the company is still trying to reduce costs. So far, about 6,700 employees have been let go in&#160;a restructuring plan&#160;that will shed a total of 12,500 employees, she said.
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Alcatel-Lucent, a global communications giant with combined annual revenue of more than US$24 billion, will debut Friday after a sometimes rocky engagement between Alcatel SA and Lucent Technologies Inc.
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Lucent Technologies has averted a potentially embarrassing delay of its shareholder vote on a merger with Alcatel,Â settling two suits by shareholdersÂ who said the deal doesn't maximize shareholder value.
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Alcatel-Lucent, a telecoms equipment giant valued at 21.5 billion euros (27 billion dollars), began life after the merger of French group Alcatel and its former US rival Lucent.
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In 2007, AMD was plagued by rising debt, shrinking market share and mounting financial losses. What's in store for 2008?
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(InfoWorld) - Alcatel-Lucent cut its revenue forecast for the year on Thursday, underscoring the challenges the newly merged company faces in a highly competitive communications equipment industry. The company now expects its revenue to be flat or up slightly in 2007, compared with an earlier forecast that it would grow in the mid-single digits along with the overall carrier market. (Both estimates use a constant exchange rate between the euro and U.S. dollar.) In its new forecast, Alcatel-Lucent cited discussions with wireless customers in North America that led it to anticipate weaker spending than it had expected among them this year. Growth in sales volume won't make up for falling prices, Alcatel-Lucent said. As a result, the company expects only to break even in the current quarter. In the second quarter, which ended June 30, it reported an adjusted net loss of â¬336 million, or $455 million as of June 30, the last day in the period being reported. France'sÂ Alcatel bought troubled U.S. infrastructure vendor Lucent last yearÂ as the companies faced Asian competitors, such as Huawei Technologies, as well as consolidation among telecommunications carriers and vendors. It cut 3,800 jobs in the first half of the year and still expects to reach a target of â¬600 million in pre-tax savings from the merger this year, butÂ the merger hasn't led to strong results. The market has lashed out: Alcatel-Lucent's shares (ALA) on the New York Stock Exchange started this year over $15 and are now below $10. On Thursday's news, the stock fell $0.88 to close at $9.16. The company is taking steps to speed up its post-merger restructuring and carry out additional focused cost-cutting plans, CEO Patricia Russo said in a prepared statement on Thursday. Alcatel-Lucent does expect some improvement from quarter to quarter. It forecast third-quarter revenue up slightly from the second quarter and a strong increase in the last quarter of the year. Bright spots in its worldwide business include the wireline and enterprise network business, as well as sales in the Asia-Pacific region.
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Costly woes continue Alcatel-Lucent has admitted its outlook is dire after it disclosed it would be writing down $4.3bn of assets.â¦
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Alcatel-Lucent said it plans further layoffs after its post-merger financial performance continued to disappoint.The company fleshed out its three-point plan for restoring profitability on Wednesday, including a renewed focus on products to help carriers transform their networks to an all-IP (Internet Protocol) infrastructure, a move from products to value-added services, and a more streamlined organization with fewer staff in support functions to eliminate post-merger duplication. It will cut a further 4,000 jobs by 2009, in addition to the thousands it has already shed, and hopes the moves will save it a further &#8364;400 million (around $575 million) by that date, it said.In another change, Alcatel will reduce its senior management team to seven members, from 11, and&#160;Chief Financial Officer Jean-Pascal Beaufret will leave, to be replaced by enterprise systems group head Hubert de Pesquidoux.Alcatel-Lucent&#39;s board has expressed its disappointment with the&#160;decline in performance&#160;since the Dec. 1&#160;merger of Alcatel and Lucent Technologies, but expressed its continued support for CEO Patricia Russo earlier this month. Russo has the board&#39;s support for her plan to restore the company to profitability, she said Wednesday.&quot;It&#39;s not a plan solely focused on cost. It&#39;s also focused on growth,&quot; she said in a conference call with analysts.As part of the plan, the company will simplify its regional structure, dividing the world into just two regions, the Americas and the rest. It will also pull out of between 10 and 20 countries where its margins are too slim to make a profit, Russo said. In those countries it will pursue &quot;an alternative strategy where we can continue to support customers but through different means,&quot; she said.For the quarter ended Sept. 30, the company reported revenue of &#8364;4.35 billion, a fall of 11.4 percent compared to the &#8364;4.91 billion that the two companies made a year earlier. Alcatel-Lucent provided comparable figures for the companies&#39; performance before their merger on Dec. 1.Currency fluctuations hurt the company&#39;s performance: the decline in revenue would have been 7.8 percent at constant exchange rates.Alcatel Lucent remains in the red, with a loss of &#8364;345 million this quarter, or &#8364;258 million excluding restructuring charges, compared to a comparable net profit of &#8364;532 million for the companies a year earlier.Alcatel-Lucent is still hoping for a &quot;solid ramp up in revenue&quot; in the fourth quarter, but seems less optimistic: it now says revenue for the full year will remain flat, rather than &quot;flat or slightly up&quot; as it predicted last month. The company offered no guidance on earnings for the full year.Revenue from the company&#39;s largest business segment, carrier networks, dropped 15.2 percent year on year to &#8364;3.14 billion, while operating profit for the segment fell from &#8364;389 million to &#8364;22 million. Alcatel-Lucent said the decline was exaggerated by the comparison with unusually strong sales of CDMA (code division multiple access) wireless networks in North America in the third quarter last year, as operators rushed to deploy a performance-enhancing software upgrade.The company has converged two of its three CDMA platforms since the start of the year, and expects to merge the remaining two by the third quarter of next year, Russo said. Going forward, it will focus research and development spending on new revenue opportunities such as the transformation of wireless networks to all-IP systems.As part of its restructuring, the company will eliminate a layer of management, merging the wireless, wireline and convergence networks divisions of the carrier networks business segment.Services revenue remained flat at &#8364;777 million, while operating profit in that sector fell to &#8364;40 million from &#8364;60 million a year earlier. The company sees services around the delivery of IPTV (Internet Protocol television) programming as a strong area.One bright spot was the company&#39;s enterprise networks business, where revenue rose to &#8364;380 million from &#8364;362 million a year earlier, with operating profit rising to &#8364;29 million from &#8364;24 million a year earlier. The move by businesses from traditional switched telephone systems to VOIP (voice over IP) on internal networks was a key driver, the company said.This article was updated with new information on October 31, 2007.
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InfoWorld - A judge in a San Diego court late Thursday dismissed one of several patent claims Alcatel-Lucent&#160;has made against Microsoft in several high-profile cases against the vendor, but that does not mean the software company is out of the woods yet.
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Telecoms equipment provider Alcatel-Lucent  could cut up to 20 percent of staff, French weekly l'Expansion reported on Tuesday.
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Adelphia Communications Corp., which filed for bankruptcy court protection in June 2002, restated financial results for three years and said its loss narrowed last year to $832.6 million.