Alcatel-Lucent Swings to a Loss, Will Cut 5,000 Jobs

Telecom & Wireless

Published: July 26, 2012 5:31 am

Last Updated: July 26, 2012 5:34 am

Alcatel-Lucent (NYSE: ALU) this morning reported a net loss of 254 million euro ($308 million), compared to a net profit of 43 million euro ($52 million) a year ago. Revenue fell 7.1% to 3.55 billion ($4.3 billion). This was Alcatel’s first loss in five quarters, and the sales figure was in line with the preliminary number Alcatel posted last week. The company said on July 17 that it would not meet its goal of improving its full-year adjusted operating-profit margin this year.

“It is clear from the deteriorating macro environment and the competitive pricing environment in certain regions challenging profitability that we must embark on a more aggressive transformation,” said Alcatel CEO Ben Verwaayen. The company plans 750 million euros ($908 million) in new cost-cuts by the end of 2013, including the elimination of 5,000 jobs.

Alcatel is France’s largest phone-equipment supplier. It was created by the 2006 merger of Alcatel SA and Lucent Technologies Inc. Nearly one-third of its revenue derives from Europe. There it has faced reduced spending budgets by the region’s largest service providers, as well as lower-cost competition from Asian vendors like Huawei Technology.

Shares are were flat Wednesday and ended at $1.06, in a 52-week trading range of $1.04 t0 $4.97. Shares were down sharply Thursday morning in European trading. Thomson Reuters had a consensus analyst price target of $1.98 before this news.

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