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Vendors enjoy upbeat earnings, prospects

While Alcatel Alsthom, Cisco Systems Inc. and L.M. Ericsson did not have a quarter of bonanza profits like some other big vendors, optimism still underlined their performances. Except for Cisco, their heroics lay more in recouping their losses rather than in raking in profits, priming them for a year of positive growth. Yet, Cisco’s profits did not generate much cheer sending technology stocks in negative domains.

French gear maker Alcatel narrowed its loss. In its mobile business, however, the picture was sunnier. The company suffered a loss of $660 million, or 49 cents per share, compared with a loss of $1.41 billion in the year-ago period, or $1.17 per share. The company hopes to break even in the first quarter of this year.

“The growth should gradually accelerate during the year following a seasonally low first quarter, which is expected to be almost flat year over year, at a constant exchange rate,” said Alcatel’s Serge Tchuruk.

“In wireless networks, our 2003 sales once more withstood the market decline, particularly when measured in Euro terms, and we see a similar outlook for 2004 with our market share continuing to grow with our 3G business gaining traction.”

The company said its second-generation, 2.5G and 3G activities grew with 1,500 node base-station deployments for the quarter. Income from operations grew 11.2 percent on sales of $153.8 million compared with sales the previous quarter of $99.6 million.

The company said it expects its mobile-phone sales to grow this year, adding it expects to make a major partner announcement later in the year. On the whole, the company posted fourth-quarter sales of $4.6 billion, a 29-percent rise from the previous quarter of $3.6 billion.

Cisco

Cisco Systems said it enjoyed a second-quarter net income of $1.3 billion, or 18 cents per share, compared with $991 million, or 14 cents per share, in the year-ago period. The result put a damper on the stocks as the market expected a better showing.

Cisco’s net sales stood at $5.4 billion compared with $4.7 billion for the second quarter of fiscal 2003. “Our strong position in the core switching and routing business continues to be complemented by positive momentum in our advanced technologies, especially in storage, security, wireless and IP telephony,” said John Chambers, chief executive officer.

UBS Warburg noted it was not surprised with the networking company’s performance, adding that Cisco said its business weakened at the end of January.

“We view management’s tone to have had increased optimism and its April-04 quarterly revenue guidance for sequential sales growth of 1 to 3 percent was in line with our expectation,” wrote Nikos Theodosopoulos, senior analyst of communications equipment at UBS.

Ericsson

In its fourth-quarter results, L.M. Ericsson posted a big pre-tax profit of $766 million, but its net income stood at $13.2 million.

Yet compared with its year ago-quarter, the infrastructure company pulled off a remarkable turnaround. In the fourth quarter of 2002, it ached with a $913 million loss.

For the full year, the company took a loss of $1.5 billion, an improvement on the previous year of $2.6 billion in losses. This figure reflected a good quarter rather than a good year.

“The mobile infrastructure market has definitely stabilized, traffic continues to grow and operators are increasing their focus on network quality and capacity,” said Carl-Henric Svanberg, president and CEO of Ericsson.

The vendor enjoyed a sequential quarterly sales boost of 29 percent to $5 billion as against $3.9 billion in the third quarter. But it fell compared with the year-ago period when it recorded $5.1 billion.

The company said its financial position improved with a net of financial assets and debt, amounting to a rise to$3.7 billion from $2.8 billion sequentially. Ericsson still leads in infrastructure contracts.

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