Alcatel-Lucent on track for break-even

Natalie Apostolou & Dylan Bushell-Embling
31 Jul 2009

Alcatel-Lucent says it is on track to break even for the full year despite a quarterly operating loss, while Motorola posted a small quarterly profit.

Paris-based Alcatel-Lucent reported a fall in revenue to €3.9 billion ($5.48 billion) for Q2, down 4.8% compared to last year. The decline was attributed largely to a 10.3% fall in sales to carriers.

However, it posted a small profit of €14 million thanks to the sale of its 21% stake in Thales for €255 million, compared to last year's €1.1 billion loss, influenced by asset writedowns.

The carrier unit experienced a revenue drop of 26.3% in its fixed provisioning and a drop of 5.3% in sales for mobile infrastructure. But the services unit, which offers managed and professional services to carriers, boasted a 7.9% rise in sales.

"Looking forward, market conditions remain difficult and operators continue to be selective about their investments," Alcatel-Lucent CEO Ben Verwaayen said.

He said the addressable market would shrink "between 8% and 12% at constant currency" for the year, expected the company to "achieve our target of an adjusted operating income around breakeven through further improvement in our margins and expense structure."

Globally Alcatel-Lucent witnessed a rise in activity in Asia with a 9.3% increase in sales with flattish results in North America and a fall of 12.8 % in Europe.

The vendor said progress was being made on cost reductions, including cuts to headcount, the use of co-sourcing facility consolidation.

The company reported that it had achieved around 35% of its plan to reduce costs and expenses by €750 million by the fourth quarter 2009.

Meanwhile, Motorola posted a net profit of $26 million, versus $4 million a year ago, although revenue slumped 32% to $5.5 billion.

Sales at the ailing mobile division dropped 45% to $1.8 billion, even as handset shipments grew to 14.8 million from 14.7 million in Q1. Motorola estimates its share of the handset market to be 5.5%.

The handset division narrowed its operating loss to $253 million from $346 million a year before. The company still intends to spin off its handset division in the near future.

Motorola stock surged nearly 9.4% to $7.19 yesterday, as the result beat analysts' expectations.

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