LONDON First quarter losses at communications equipment combine Alcatel-Lucent (Paris, France) more than doubled to Euros 402 million ($535 million) from the corresponding period last year.
Revenues for quarter also decreased 6.9 per cent year on year to Euros 3.6 bn. Sales at Alcatel-Lucent's carrier business, which makes fixed-line and mobile network equipment for telecoms operators, fell 14 per cent to Euros 2.2bn.
The company tried to reassure investors, saying that while sales at the Carrier and Enterprise unit declined at double digit rates year on year, revenues from the Services division grew in the high teens.
It confirmed previous guidance that it is seeking to break even in 2009 in terms of adjusted operating income. It also reiterated its expectation that sales by all telecoms equipment makers will fall 8-12 per cent in 2009, partly because of the global economic downturn.
Ben Verwaayen, Alcatel-Lucent's chief executive, and a former CEO at U.K. carrier British Telecom, said that while the first quarter operating loss was expected, partly because of tough market conditions, "we are not pleased with the operating loss."
Last week Ericsson, the leading maker of mobile network equipment, posted a 49 percent drop in first-quarter core profit, hurt by a slumping global mobile phone market and some cutbacks in investments by operators.
So far, Alcatel-Lucent has eliminated 290 management positions out of the 1,000 planned, while the number of contractors has been reduced by about 770 out of the 5,000 planned. The compnay said it still expects that, by the fourth quarter, it would achieve total cost and expense savings of Euros 750 million.
The equipment supplier reported falling sales of mobile network equipment based on CDMA wireless technology in North America. It also highlighted falling sales of fixed line equipment based on ADSL technology.
In total, the decline was most pronounced in North America, where revenues decreased 28 percent year on year, and to a lesser extent in the Asia Pacific region, where sales were down 8 percent.
Meanwhile, Alcatel-Lucent said the planned sale of its 20.8 per cent stake in French defense firm Thales to Dassault Aviation for Euros 1.6 bn has been approved by the relevant regulatory authorities and that it would go ahead during the second quarter.
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