Alcatel-Lucent continued its struggle with profitability during the third quarter, even with encouraging results on revenue growth.
The company’s revenues were up 7% year-over-year at constant exchange rates, but it still reported a net loss ofabout $270 million.
Alcatel-Lucent is in the midst of a major shift, from a focus mainly on network infrastructure to becoming a IP networking and mobile broadband-focused company. That transition, called the Shift Plan, also includes layoffs and other cost savings such as restructuring its debt. The company announced its intent to make 10,000 layoffs recently.
Among the details of the results:
- Alcatel-Lucent’s core networking segment grew 6% year-over-year, with strong growth in IP routing and improvement in IP transport, mostly from terrestrial and submarine optics.
- The company’s access segment in wireless and fixed networks saw good performance driven by broadband roll-outs, partly offset by declines in legacy technologies.
- Revenues decreased from managed services, which the company said was in line with its strategy and restructuring.
Alcatel-Lucent saw particularly strong growth in its key North American market, where it posted its second consecutive quarter of almost 20% year-over-year growth at constant exchange rates. The vendor said China accounted for stable revenues, while it saw a slight decline in the rest of Asia-Pacific. Western Europe revenues grew more than 5%; revenues from the Middle East and Africa grew in the mid-teens, while Central and Latin America slowed.
Alcatel-Lucent said its focus on savings, along with improved revenues, contributed to a positive adjusted operating income of about $157 million and that it expects to exceed the $337 million to $405 million fixed cost savings that were estimated in the Shift Plan.
“We are seeing the first positive signs of our new operating model in our day-to-day business and are encouraged by the substantial progress in the Shift Plan key metrics,” said Michael Combes, Alcatel-Lucent’s CEO. “Going forward, we remain fully focused on execution to leverage the momentum we are building.”