AlcaLu in the red again as sales shrink 9%

Robert Clark
02 Nov 2009

Alcatel-Lucent returned to the red in Q3 but has maintained its forecast of operational break-even in 2009.

The vendor posted a net loss of €182 million, down from €40 million ($268m) a year ago and a €14 million profit in the second quarter.

Revenue declined 9.3% to €3.7 billion from Q3 last year, with sales to carriers hit particularly hard, falling 14.6% year-on-year and 16% at constant currency rates.

Sales of wireless networks, the biggest product line, were off 18.3, the company said. “GSM was sharply impacted by 3G migration, slower mobile subscriber growth and capital expenditure constraints across almost all geographies,” it said. CDMA declined because of weak demand in North America, although W-CDMA enjoyed its highest quarter ever, thanks to China and North America rollouts.

Service sales were up 2.5% year-on-year, with an operating profit margin of 4.4%, compared with 10.4% a year ago. Asia-Pacific revenue was flat at $728 million, compared with $727 million a year ago.

CEO Ben Verwaayen said the company had achieved 80% of its €750 million target in annualized cost savings and had generated €362 million in free cash flow in the quarter.

It maintained its forecast of an 8%-12% decline in the market for the full-year, but expected that “we will achieve an adjusted operating income around breakeven.”

Alca-Lu’s stock fell 11.51% on NYSE after the announcement, but rose 1 cent to $3.70 in after-hours trade.

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