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Amid Q3 loss, Alcatel-Lucent CEO promises turnaround plan

Alcatel-Lucent posted another loss in the third quarter as new leadership vowed to return the world’s largest telecommunications equipment maker to profitability.
The French-U.S. company reported a net loss of $51 million, a 43% decrease from the $445 million the company reported for the third quarter of 2007. The loss is the result of restructuring charges the company has incurred since the company was formed through the merger of Alcatel SA and Lucent Technologies Inc. Alcatel acquired U.S.-based Lucent for $11.4 billion in 2006.
The company has been in the red for the past seven quarters and has undergone a recent change in leadership. In September, Philippe Camus replaced Serge Tchuruk as chairman and Ben Verwaayen replaced Patricia Russo as CEO.
The company has suffered from internal clashes and stiff competition from L.M. Ericsson, Nokia Siemens Networks and Chinese giant Huawei Technologies Co. in the wireless infrastructure market.
“Our profitability remains unsatisfactory,” Verwaayen said in a statement.
However, Verwaayen said the company is in good shape from a cash standpoint and for the quarter met its revenue guidelines.
For the quarter, revenues declined 6.6% from a year ago and 0.9% when compared with the second quarter. For the third quarter, the company generated $5.2 billion in revenue compared with $5.5 billion posted a year ago.
Carrier revenue declined 9.4% and the company saw spending decline by customers in developed markets. However, the company posted gains in enterprise revenue, up 6.3%, and services, up 16.6%.
“We continued to grow our enterprise business at a healthy rate and saw accelerated growth in services,” said Verwaayen, former CEO of BT Group plc.
The company’s adjusted operating profit for the quarter was $51.2 million compared with $89 million the company posted in the third quarter in 2007.
As the company moves forward, Verwaayen said he has a plan, which will be unveiled by the end of the year, to turn the company around.
For the final quarter of the year, the company is projecting that the global telecommunications equipment and related services market to be flat. Based on the outlook for the fourth quarter, the company continues to expect its year-end net debt to be materially reduced compared with the level at the end of June of this year.
The company plans to announce its full-year 2008 results in February.

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