Alcatel-Lucent narrows Q1 loss

Alcatel-Lucent (ALU) narrowed its first-quarter loss driven by strong wireless sales in North America. However, the company’s stock slid nearly 5% in trading as analysts worried the infrastructure provider needs more contracts outside North America. The stock price was improving at press time, trading at about $6.19 per share.
Revenues were up 15.2% from a year ago to $5.42 billion. North America accounted for 42% of total sales. Indeed, North American revenue grew 39.9% year over year to $2.26 billion in the quarter, followed by Europe, which accounted for $1.63 billion in revenues, down 1.8% from a year ago. Asia-Pacific accounted for $784 million in revenue, but growth in the region was only up 1.7% from 2010. The rest of the world pulled in $752.2 million for Alcatel-Lucent.
“We have started this year the way we ended the last, increasing growth, profit and global strength, and to do so in the first quarter is particularly pleasing,” said CEO Ben Verwaayen. “A favorable geographic and product mix impacted positively our gross margin while actions on fixed costs have been taken which will drive further efficiency gains during the course of the year. … Market momentum remains robust, driven by demand for more capacity and service delivery capabilities in many geographies. While we are facing some difficulties with our supply chain, we believe those challenges will have a limited impact on our business performance thanks to rapid actions taken. With a strong start to the year, we are reaffirming our full-year outlook to grow faster than our addressable market with an adjusted operating margin above 5% of our 2011 sales.”
Alcatel-Lucent is in the final year of a three-year plan to become profitable. The company reported a net loss of $14.6 million for the quarter, a substantial improvement from the $746 million loss in first-quarter 2010.
The company’s network business, which includes wireless, wireline, IP and optics divisions, was up 25.4% to $3.5 billion. Of that, $1.62 billion came from the wireless unit, which reported revenues had increased $36.5% from a year ago.
In wireless, “growth was concentrated in the Americas and was driven largely by our CDMA EV-DO
business, which more than doubled its year-ago level, and by our 4G LTE business,” Alcatel-Lucent stated. The company also noted that Telefonica has joined its program to create its lightRadio architecture, as well as signed a memorandum of understanding on lightRadio and a cloud-based radio access network with China Mobile. China Mobile also selected Alcatel-Lucent to deploy the world’s largest 4G TD-LTE end-to-end trial network in Shanghai.
The company also pointed out new wins in its mobile backhaul business withTelepak Networks and nTelos in the United States. “Our leadership in mobile backhaul was confirmed by a new report from Infonetics Research that named Alcatel-Lucent as the #1 market share leader with 25% of worldwide Ethernet cell site gateway and router revenue in 2010 and found that we had widened our No. 1 lead in the second half of the year,” the company noted.
Its applications business was up 8.4% for the year and its services business was up 4.8%.