Struggling Alcatel-Lucent (ALU) showed signs that its “Shift Plan” is well underway as it posted mixed fourth quarter and full year results for 2013, and announced the sale of its enterprise unit to China Huaxin for $362 million.
The Paris-based telecom equipment maker posted flat revenues for the fourth quarter of $5.32 billion and a net loss of $1.76 billion for 2013. However, this loss was less than the $2.7 billion of 2012. In addition, Alcatel’s 34% gross margin and operating profit of $415 million outperformed expectations.
In Paris, Alcatel-Lucent’s share price increased throughout the morning, rising from €3.04 at close on Wednesday to €3.32 by mid-day.
In June, just four months after taking over as Alcatel-Lucent CEO, Michel Combes announced the “Shift Plan,” which would restructure the company to focus on broadband access, IP and cloud networking. Now, Combes said the 2013 results show the company is seeing “strong commercial traction” in these areas.
“We have demonstrated today that we are well on track to meet the Shift Plan’s objectives,” he said. “Overall, we have made significant progress to improve competitiveness, both in terms of profitability and innovation. Looking ahead, we are fully focused on implementing, delivering and executing The Shift Plan by the end of 2015.”
The sale of Alcatel’s enterprise unit, which makes phone systems and equipment for business use, is part of the plan, which called for selling $1.4 billion in assets and making $1.4 billion in cost cuts. According to Alcatel, China Huaxin, a technology investment company, has made a binding offer for a majority stake in the unit. As part of the agreement, Alcatel would keep a 15% stake. The deal is subject to regulatory approval, but Alcatel expects it to close by the third quarter.
In addition to the sale of its enterprise unit, Alcatel-Lucent announced in December that it would sell its wholly-owned subsidiary LGS Innovations, which provides networking and communications solutions to the U.S. federal government, to investor groups Madison Dearborn Partners and CoVant for $200 million.
Efforts to make cuts were also evident in Alcatel-Lucent’s results. The company reported a fixed costs savings of $141 million in the fourth quarter, bringing total savings to $491 million for 2013. The company had also announced in October that it would be cutting 10,000 jobs.
Alcatel-Lucent has not made a profit in more than a year and has been struggling with increased competition from Huawei Technologies as well as with its European rivals Ericsson and Nokia Solutions and Networks.
