Alcatel-Lucent Posts $3.74 Billion Quarterly Loss on Writedowns
By Rudy Ruitenberg
Feb. 8 (Bloomberg) -- Alcatel-Lucent SA, the world's largest maker of telecommunications equipment, reported a wider fourth- quarter loss on 2.53 billion euros of asset writedowns.
The loss totaled 2.58 billion euros ($3.74 billion) versus a loss of 615 million euros a year earlier, Paris-based Alcatel- Lucent said in an e-mailed statement. Excluding the writedowns, the net loss was 48 million euros. Analysts predicted a profit of 181 million euros on that basis, the median of 12 estimates in a Bloomberg News survey.
Alcatel-Lucent's market value has plunged by 13.5 billion euros since December 2006, when Alcatel SA bought Lucent Technologies Inc., as the merger and a plan to eliminate 16,500 jobs failed to compensate for price competition and falling orders.
``It's a total disappointment,'' said Frederic Hamm, who helps manage 150 million euros at Agilis Gestion in Paris, ahead of the earnings report. ``Alcatel bought Lucent at the worst moment, when growth in the U.S. was slowing down.''
Estimates for the adjusted results ranged from a loss of 207 million euros to a profit of 409 million euros, as analysts differed on whether to include further restructuring expenses and writedowns.
The company said it wrote down the value of its business that provides equipment using a mobile technology called Code-Division Multiple Access, or CDMA.
Alcatel-Lucent forecast an operating loss in the first quarter of 2008. The company said that historically, first- quarter sales have fallen 20 percent to 25 percent from the previous quarter.
In October, Alcatel-Lucent raised its job-cut target to 20 percent of the workforce in response to falling sales. At the time of the merger, the company said it would cut 9,000 jobs, and raised that to 12,500 a year ago.
Sales Rise
Sales rose 20 percent to 5.23 billion euros from 4.42 billion euros in the year-earlier quarter. Sales had been seen at 4.87 billion euros, based on the median of 14 estimates.
Alcatel-Lucent shares have dropped 59 percent in the past 12 months, compared with a 52 percent decline for Ericsson AB, the world's largest maker of wireless networks. Alcatel-Lucent is the worst performer of France's benchmark CAC 40 Index, which declined 17 percent in the same period.
The company has said restructuring costs will be about 1.6 billion euros, including 900 million euros in 2007.
Alcatel-Lucent forecast in June 1.7 billion euros in annual cost savings after three years, and savings of 600 million euros this year. About 55 percent of the total will come from job cuts and 45 percent from process improvements and areas such as purchasing, according to the company.
In the fixed-line network business, revenue increased 15 percent, while the mobile business boosted sales 26 percent.
Alcatel-Lucent's ``convergence'' unit, which makes products that handle video transmissions via fixed and mobile networks, reported a 4.6 percent drop in sales.
October Forecast
In October, Alcatel-Lucent said that 2007 sales would be little changed at constant exchange rates, from a previous outlook for sales to be ``flat or slightly up'' from the previous year.
Gross profit, or sales minus the cost of goods, jumped 17 percent to 1.69 billion euros. Profit on that basis had been expected to rise 18 percent, based on the estimates.
Since Alcatel-Lucent was created in December 2006, the company announced a spending slowdown by customers in North America and said Hubert de Pesquidoux would replace Chief Financial Officer Jean-Pascal Beaufret.
To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net .
Last Updated: February 8, 2008 01:47 EST |
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