PARIS-French telecommunications vendor Alcatel SA’s net income tumbled from $359 million last year to $160 million in the first quarter, news that sent the company’s stock falling almost 10 percent to around $10.63 per share.
“During the first quarter, the operating margin was impacted by product-launching costs associated with our NGN core solution and an unfavorable geographical mix of the business,” said Serge Tchuruk, the company’s chairman and chief executive officer. “We expect strong revenue growth to continue in the second quarter, with a return to double-digit operating margins.”
Alcatel’s operating profit in its mobile division dropped from $103 million last year to $85 million in the first quarter, although revenue increased by around 28 percent. The company blamed the expensive launch of its next-generation network core product and its acquisition of Spatial Wireless, as well as a “less favorable geographical mix.” Alcatel said it boosted its research and development efforts in China, Russia and France to meet strong mobile demand.
The company offered some bright points in the wireless sector, pointing out strong success in the United States for second and third generation contracts with T-Mobile, Cingular and Dobson.
