Alcatel-Lucent scores profit, but stock declines

Alcatel-Lucent (ALU) shares dropped 9% after the infrastructure vendor released positive second-quarter earnings results that failed to meet expectations. CEO Ben Verwaayen reiterated that the company expects a strong second half of the year. Nevertheless, the stock was down nearly 19% at press time.
“We are on track for the year. In the second quarter, our next-generation product sales increased sharply, delivering market share gains in IP and optics, driven by the need for capacity and all-IP network transformation,” Verwaayen said. “From a geographic standpoint, we enjoyed significant growth in North and Latin America as well as in Asia Pacific.”
Second-quarter revenue increased 2.4% year-over-year to $5.58 billion, while net income stood at 461.5 million for the quarter. Alcatel-Lucent posted a net loss of $263 million in second-quarter 2010. The company’s wireless division saw revenues increase 5.7% to $1.54 billion. “In particular, after a year-over-year growth of 22% in the first quarter 2011, Networks continued to see a strong double digit year-over-year increase in revenue this quarter with all divisions growing,” the company said. “IP revenues growth accelerated and recorded 35% year-over-year progression while optics division maintained a healthy momentum with an increase close to 6%. In access, 3G and 4G technologies drove the strong growth of the wireless division and in wireline, IPDSLAM and PON technologies more than offset the decline of legacy products.”
Geographically, North America remains important to the vendor. Sales in North America were up 18% and up 14% in the quarer in Asia Pacific. China revenues were up 40% from the year-ago period. Central and Latin America recorded mor than 30% year-over-year growth as well. A decline in Eastern European revenues was offset by a slight increase in Western European revenues.
In wireless, “Gains were led by our CDMA EV-DO business in the Americas, by our 2G and 3G businesses in the Asia Pacific region and by our 4G LTE business. In 4G LTE, we announced an agreement with Cassidian, an EADS Company, to provide a 4G LTE-based mobile broadband solution for emergency response and security communications systems; and we expanded our joint venture with State Corporation Russian Technologies to develop and manufacture LTE components customized for the Russian market.”