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PARIS (AP) - Telecommunication equipment titan Alcatel-Lucent sees global economic woes causing it uncertainty in 2008 after the newly merged company survived a choppy 2007, reporting a fourth-quarter loss Friday and scrapping its dividend for last year.
The Franco-American company had some good news, however: Sales rose, and it swung to an operating profit in the fourth quarter.
Analysts said the results were slightly better than expected and that the company’s grim outlook reflects the difficult market overall.
Rivals Telefon AB LM Ericsson and Nokia Siemens Networks have already given downbeat forecasts for the market in 2008 amid falling orders. Shares in all three companies rose initially on Alcatel-Lucent’s earnings report.
Alcatel-Lucent reported a net loss of $3.76 billion in the quarter ending Dec. 31 and $5.12 billion for the year, as it booked $3.71 billion in write-downs in the quarter related to the reduced value of assets inherited from Lucent Technologies Inc.
Revenue for the fourth quarter rose to $7.61 billion, up 18 percent from the same period in 2006 and above analysts’ forecasts.
Operating profit amounted to $441 million, compared to a loss of about $4 million a year earlier. Operating profit excludes one-time items such as restructuring costs and asset sales, but is often used as a yardstick for a company’s basic business activity.
The fourth quarter normally sees strong revenues for telecommunications equipment makers, and the latest figures were up - but from a disappointing total in the fourth quarter of 2006, during which Alcatel SA of Paris completed its acquisition of Lucent Technologies Inc. of Murray Hill, New Jersey.
Alcatel-Lucent suspended its dividend for 2007, citing uncertainty for this year.
“While the long-term prospects of our industry remain good, the macroeconomic environment has created uncertainty in our markets in the last few months,” CEO Patricia Russo said in a statement.
The company predicted a first-quarter loss in 2008 because of a seasonal drop in revenue of 20 percent to 25 percent. Chief Financial Officer Hubert de Pesquidoux said he hoped the second quarter of 2008 would be better.
Alcatel-Lucent said it forecasts the global communications equipment and related services market in 2008 to be “flat to slightly up” at a constant euro-dollar exchange rate and “slightly down” at the current rate.
Russo seemed to be lowering investors’ expectations for the second year of the combined operation after the company’s bullish expectations for 2007. After a string of profit warnings last year, Russo faced down bouts of speculation that she or chairman Serge Tchuruk were under pressure to quit.
The company is also in the midst of a painful restructuring that foresees 12,500 job cuts. Alcatel-Lucent said it cut 6,700 jobs in 2007, for a total of 77,400.
Alcatel-Lucent is starting to show that underlying restructuring is working despite a tough market, and investors should see improving fundamentals this year and next, Exane BNP Paribas analyst Alexander Peterc said in a research note.
Analyst Richard Windsor of Nomura, however, said, “It looks to us like there is little or no delivery of savings to investors but rather to customers.”
When it was conceived, the Alcatel-Lucent merger 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. But intense competition in the industry means many of the savings have been used on discounts passed on to customers.
Alcatel-Lucent’s share price has plunged about 60 percent over the previous 12 months on the back of a string of profit warnings and concern over growth prospects for 2008.
Alcatel-Lucent shares closed up slightly at $6.03 in Paris after bobbing up and down earlier. Its U.S.-traded shares fell 25 cents, or 4 percent, to close at $6 in New York.

by AOL

PARIS - Alcatel-Lucent, the Franco-American telecommunications equipment maker, posted a loss Friday of about $3.8 billion for the fourth quarter, said it would scrap its 2007 dividend and predicted a rocky 2008.

Alcatel-Lucent reported a net loss of 2.58 billion euros in the quarter ending Dec. 31, as it booked 2.52 billion euros ($3.71 billion) in write-downs related to the reduced value of assets inherited from Lucent Technologies Inc.

Still, the company said sales rose and it swung to an operating profit in the last three months of 2007.

Revenue for the fourth quarter rose to 5.23 billion euros ($7.61 billion), up 18 percent from 4.42 billion euros in the same period in 2006. That was above the 4.92 billion euros forecast by analysts.

Operating profit amounted to 303 million euros ($441 million), versus a loss of 3 million euros a year earlier. Operating profit excludes one-time items such as restructuring costs and asset sales, but is often used as a yardstick for a company’s basic business activity.

The fourth quarter normally sees strong revenues for telecommunications equipment makers. But the latest figures were up from a disappointing total in the fourth quarter of 2006, during which Alcatel SA of Paris completed its acquisition of Lucent Technologies Inc. of Murray Hill, N.J.

Despite the rise in fourth-quarter sales, Alcatel-Lucent painted a somber picture for 2008. Its American CEO Patricia Russo linked the forecast to the larger global economic picture.

“While the long term prospects of our industry remain good, the macroeconomic environment has created uncertainty in our markets in the last few months,” Russo said in a statement.

Rivals Telefon AB LM Ericsson and Nokia Siemens Networks, the joint venture between Nokia Corp. and Siemens AG, have already given downbeat forecasts for the market in 2008.

Alcatel-Lucent said it would suspend its 2007 dividend because of the uncertain outlook for 2008. The company predicted a first-quarter loss in 2008 because of a seasonal drop in revenue of 20 percent to 25 percent.

Alcatel-Lucent said it forecasts the global communications equipment and related services market in 2008 to be “flat to slightly up” at a constant euro-dollar exchange rate and “slightly down” at the current rate.

Russo seemed to be lowering investors’ expectations for the second year of the combined operation after the company’s bullish expectations for 2007. After a string of profit warnings last year, Russo faced down bouts of speculation that she or chairman Serge Tchuruk were under pressure to quit.

Russo predicted the company would recover market share in the GSM and WCDMA mobile-phone technologies in 2008. “We’re going to do everything we can to gain share in 2008.” WCDMA, or Wideband Code-Division Multiple Access, is a third-generation wireless technology.

Alcatel-Lucent’s share price has plunged about 60 percent over the previous 12 months on the back of a string of profit warnings and concern over the growth prospects for the telecommunications equipment market in 2008.

Alcatel-Lucent were down 1.4 percent to 4.07 euros ($5.93) in afternoon trading in Paris after bobbing up and down earlier. Its U.S. shares fell 20 cents, or 3.3 percent, to $6.05 in morning trading in New York.

Alcatel-Lucent reported a net loss of 3.52 billion euros ($5.12 billion) for all of 2007. The loss stemmed primarily from the goodwill writedown.

Excluding the non-cash write-downs, Alcatel-Lucent posted an adjusted fourth-quarter loss of 48 million euros ($69.9 million) compared with a loss of 618 million for the same quarter a year earlier. The adjusted loss for 2007 was 433 million euros ($630 million) compared to a profit of 522 million euros ($760 million) in 2006.

The 2006 fourth-quarter and yearly results were unusual, however, because they were calculated based on 11 months of Alcatel earnings and one month of the combined Alcatel-Lucent.

by MSN

(Updates with CFO comments; breakdown by segment)
PARIS, Feb. 8, 2008 (Thomson Financial delivered by Newstex) — Alcatel-Lucent (NYSE:ALU) reported a 2.58 bln eur net loss for fourth-quarter 2007, mainly due to a writedown on its CDMA mobile and IP multimedia (IMS) activities, where sales growth has been slower than expected.
The group’s adjusted net loss, not including the 2.52 bln eur writedown, was 48 mln eur, narrowing from a proforma net loss of 618 mln eur a year earlier.
Sales in the fourth quarter were 5.234 bln eur, up 18.4 pct from proforma 4.421 bln a year earlier and above both consensus and the group’s own expectations.
The sector is traditionally strong in the fourth quarter of the year and the group had promised a ’solid ramp-up’ in sales.
Alcatel-Lucent said that this growth reflects stronger IP and optics activities, a recovery of the GSM business and the ramp-up of high-speed WCDMA.
According to a consensus of analyst forecasts compiled by Thomson Financial, net profit in the fourth quarter was seen at 242 mln and sales at 5.005 bln.
Alcatel-Lucent said in a statement that in light of the results ‘and of a more uncertain market outlook … the board has determined that it is prudent to suspend dividend payment for 2007′.
Adjusted operating profit was 303 mln eur in the fourth quarter, swinging from a loss of 3 mln, translating to a margin of 5.8 pct after a negative margin a year earlier and the company said this improvement reflected higher volumes and, ‘to a lesser extent, a reduction in our operating expenses.’
The company had promised 600 mln eur savings in operating costs for 2007, based largely on planned job cuts.
It said 6,700 posts were removed in the full-year but 1,400 were added, in what chief financial officer Hubert de Pesquidoux told a conference call with journalists was ‘in-sourcing.’
Operating expense savings in 2007 totalled around 280 mln eur, the company said.
De Pesquidoux said the group expects an adjusted operating margin of 2.5-5.0 pct in the full-year 2008.
Adjusted gross profit was 1.694 bln eur after 1.447 bln a year earlier, translating to a gross margin of 32.4 pct after 32.7 pct a year earlier.
Looking ahead, Alcatel said seasonal factors will bring a loss at the adjusted operating level for the first quarter of 2008 and, ‘while the long term prospects of our industry remain good, the macroeconomic environment has created uncertainty in our markets in the last few months’.
It said its ‘initial projections for 2008′ point to a global telecommunications equipment and related services market with growth ‘flat to slightly’ up at constant eurodollar rates and slightly down at constant rates.
Alcatel said its net cash position was 271 mln eur at Dec 31 2007 compared with negative 124 mln a year earlier and that the funding status of pensions and other post retirement benefits totaled 2.806 bln eur at year-end, up from 2.436 bln at end-September
By activity, carriers sales were 3.734 bln eur in the fourth quarter, up from pro forma 3.214 bln, with wireline climbing 15 pct to 1.691 bln from 1.470 bln as strong growth in optical offset a 5 pct slide in DSL lines deliveries to 8.3 mln.
Over full-year 2007, DSL lines deliveries increased 8 pct, but Alcatel-Lucent had warned in October that the housing slump in the US had hit orders of new lines late in the year.
Wireless sales jumped 26 pct to 1.570 bln eur from 1.249 bln a year earlier, driven primarily by higher sales in GSM and WCDMA, where revenues more than doubled sequentially as the group started to deploy contracts booked at the start of the year.
Adjusted operating operating profit from carrier activities was 94 mln eur, after a pro forma loss of 73 mln a year earlier, with the margin at 2.5 pct. The group did not give a breakdown by segment.
Adjusted operating operating profit from enterprise operations was 56 mln eur, up from 49 mln, with the margin at 12.9 pct, up from 11.9 pct.
Services had adjusted operating operating profit of 107 mln eur, up from 35 mln, with the margin climbing to 10.5 pct from 4.4 pct.
De Pesquidoux said Alcatel-Lucent now has 7.28 bln eur of goodwill remaining on its balance sheet from the merger.
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by CNN