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Alcatel-Lucent net loss widens in first quarter, report says

Alcatel has now piled up around 9 billion euros in losses over the last nine quarters

Alcatel-Lucent net loss widens in first quarter, report says

Alcatel-Lucent's net loss widened in the first quarter as sales of both wireless and wireline communications gear continued to fall in all major global markets amid the global economic downturn.
The world's third-largest supplier of wireless networking gear for telecom operators and companies blamed tough market conditions and continued restructuring for the shortfall - its ninth consecutive quarterly loss since Alcatel-Lucent was created in 2006. The Paris-based company reported a net loss for the January to March quarter of 402 million euros (US$531.56 million), compared to a 181 million euros loss a year earlier.
The company has now piled up around 9 billion euros in losses over the last nine quarters. The company doesn't expect to make a full-year profit until 2011, five years after Alcatel SA's purchase of Murry Hill, New Jersey-based Lucent Technologies Inc. for US$11.4 billion in 2006.
Sales fell 6.9 percent in the first quarter to 3.6 billion euros, following a steep drop in sales of wireless equipment to North American operators.
In a statement, the company said it still expects the global market for telecommunications equipment and services to contract between 8 and 12 percent this year compared to 2008.
The Espoo, Finland-based joint venture between Nokia and Germany's Siemens AG said it expects demand for network infrastructure to fall 10 percent, twice the earlier forecast of a 5 percent contraction. Speaking in conference call with reporters, Alcatel-Lucent Chief Executive Ben Verwaayen called 2009 a "transition year" in which "we want to build the foundations so that next year there'll be much better results."
Shares in the company fell 7.2 percent in the first quarter but have rebounded since then, benefiting from the global stock market rally. In early trading on the Paris stock exchange yesterday, the shares were down 6 percent at 1.84 euros.
The company has engaged in successive waves of restructuring since the merger, with its current plan calling for the elimination by the end of this year of 16,500 jobs out of a total work force at the end of 2007 of 76,410.
The Alcatel-Lucent tie-up was designed to boost margins through cost and research and development savings, while improving the joint company's pricing power with telecom operators, its largest customers.
The combination aimed to create the critical mass needed to compete with the likes of China's Huawei Technologies Co. and LM Ericsson of Sweden. But intense competition forced to the company to pass many of the savings on to customers in the form of discounts. Analysts said Alcatel-Lucent has not coped as well as some of its competitors.
According to one estimate, Huawei Technologies even surpassed Alcatel-Lucent in terms of market share in the fourth quarter last year. The Shenzen, China-based company leapfrogged into third place behind Sweden's LM Ericsson and Nokia Siemens Networks, according to Nadine Manjaro, senior analyst at Oyster Bay, NY-based ABI Research. However, CEO Verwaayen noted that last month Alcatel-Lucent notched up a pair of "massive deals" in China, including one worth US$1 billion with China Mobile, the world's biggest phone company by subscribers.
China, the world's biggest telecommunications market, has become a strategic battleground for all the big network equipment suppliers. Late last year, the country started a long-delayed introduction of third-generation mobile phone services, setting off a politically charged scramble by foreign and Chinese equipment makers for up to US$41 billion in orders for base stations, switching gear, transmission networks and other infrastructure.


Updated : 2021-02-28 00:45 GMT+08:00