Alcatel-Lucent to post Q2 operating loss, will miss annual profit goal
Alcatel-Lucent (NASDAQ: ALU) said it will post an operating loss in the second quarter of around $48.8 million on revenue of $4.27 billion, and will miss its profit target for 2012. The weak financial news sent the company's shares down to a three-year low.
The network equipment vendor said it expects its second half to be better than its first half, but that because of its performance so far, it will miss its previous operating margin guidance. The company had expected its operating margin to rise for 2012. The company said it saw "a good sequential growth in sales" in all markets, but that it will provide further guidance when it reports second-quarter earnings July 26.
Alcatel-Lucent's lowered outlook comes as CEO Ben Verwaayen is facing pressure to turn the company around faster. The infrastructure vendor reported its first annual profit last year since the merger of France's Alcatel and U.S.-based Lucent six years ago. However, shares in the telecom-gear giant have lost two-thirds of their value in the past year, and shareholders vented their frustration at the company's annual meeting last month.
The weak news from Alcatel-Lucent comes a day after Chinese network vendor ZTE warned its first-half profit may have fallen 80 percent from a year earlier. ZTE blamed the slide on reduced investment income, foreign-exchange losses and delayed network contracts.
Some analysts see the pressure equipment vendors are facing as a sign of tight times to come, as sales from LTE equipment fail to compensate for potential drop-offs in sales of 2G and 3G gear. Banking firm Handelsbanken expects carrier spending on 2G, 3G and LTE network equipment combined will be $45 billion a year by 2020, down from around $59 billion in 2011, even as LTE spending grows to more than half the total, according to Reuters.
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