Alcatel-Lucent’s revenue grew slightly year-over-year as the company made progress on its new plan to transition its business to focus on IP networking and mobile and fixed ultra-broadband access — but the company still had major losses for the quarter.
Second quarter revenue was up 1.9% to about $4.8 billion (3.61 billion euros). However, losses steepened to about $1.17 billion (883 million euros) for the quarter, which Alcatel-Lucent attributed to restructuring charges of 194 million euros, interest charges net losses on repurchased debt, pension costs and a major charge of 552 million euros “resulting from the impairment test review of our assets carried at the end of the second quarter 2013, using assumptions consistent with The Shift Plan documentation.”
Despite the losses, the company’s stock is up. Perhaps bigger news this week from the company was its announcement that it will partner with Qualcomm on small cells for residential and enterprise deployments. Investors have reacted favorably to Alcatel-Lucent’s week, with the stock at a 52-week high and trading Wednesday at $2.52 per share.
Alcatel-Lucent announced in June that it is executing on a three-year strategy it calls the Shift Plan to transform it from a telecom equipment generalist to a focus on the technologies at the center of next-generation networks: IP networking and superfast broadband, both mobile and fixed. The company is restructuring its debt as part of the plan.
“We are at the beginning of our journey towards 2015 and cash remains a challenge,” said CEO Michael Combes in comments on the quarter’s results. “Looking ahead, our clear focus will be maintaining a strict and disciplined approach to implementing The Shift Plan across all of its industrial, operational and financial dimensions.”
Alcatel-Lucent said that its networks and platforms division grew by 8% year-over-year and that IP in particular grew more than 25%, boding well for its transition. Optics reduced its decline from 15% in the first quarter to 5% in the second.
” To a lower extent, we have seen some traction in our fixed networks and wireless activities, where LTE and vectoring growth were partially offset by declines in legacy technologies, as well as insServices, which benefited from networks roll-outs,” the company reported. Its growth in North America was particularly strong, up 20% and serving as a key driver for overall growth.
