Alcatel-Lucent posts Q3 loss, considers unspecified asset sales to boost finances
Alcatel-Lucent (NASDAQ: ALU) reported a net loss for the third quarter as sales slumped, though CEO Ben Verwaayen said the vendor is on track with its latest restructuring plan, which will see around 5,500 jobs axed. Further, CFO Paul Tufano said the company is considering unspecified asset sales to provide liquidity and bolster its balance sheet.
The vendor posted a net loss for the quarter of $189 million, a sharp downturn from the profit of around $251 million in the year-ago period, when the company benefited from a one-time tax gain. Alcatel-Lucent reported an adjusted operating loss of around $162 million, down from an adjusted operating profit of around $193 million in the year-ago quarter, and its gross margin fell to 27.9 percent from 35.3 percent a year ago.
Overall sales were down 2.8 percent year-over-year to $4.66 billion. Sales fell 10 percent in North America year-over-year when adjusted for constant currency, and also fell by the same amount in Asia Pacific. Sales in economically struggling Europe were also down, dropping 15 percent from the year-ago period.
As part of the company's restructuring, on Jan. 1 Tufano will also take on the newly created role of COO to spearhead the company's plan to restructure its operations. That and other organizational changes are part of the company's "performance program" that it announced in late July in conjunction with its weak second-quarter earnings. The plan involves 5,500 job cuts, or more than 6.4 percent of the firm's 78,000 total employees. The cuts and changes to operations are aimed at saving $1.6 billion by the end of 2013. Verwaayen said that so far this year the company has saved $582 million.
Despite that, Tufano indicated that more could be done. "We are looking at all the options to strengthen our balance sheet," Tufano said on a conference call with analysts, according to Bloomberg. "We have assets we can dispose of that would bring in a good amount of liquidity."
Alcatel-Lucent said revenue in its networks business was down 4.3 percent to $2.83 billion. Revenues for the wireless division clocked in at $1.08 billion, a decrease of 18.9 percent from the year-ago quarter. The company said its wireless business faced another difficult year-over-year comparison in the third quarter, and that overall cautious spending from carriers led to declines across most technologies, especially in legacy equipment. Alcatel-Lucent said its LTE business showed year-over-year stability driven by continued investment in the United States, despite the company getting a great deal of revenue from LTE in the year-ago quarter. The company pointed to a major contract win with China Mobile to deploy the largest share of the carrier's TD-LTE trial network deployment, including the city of Shanghai. Sprint Nextel (NYSE:S) also selected the vendor's lightRadio Metro Cells as part of its Network Vision deployment.
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