Alca-Lu banks on surging mobile internet for recovery

Alcatel-Lucent CEO, Ben Verwaayen, believes that the eventual success of his struggling company will be driven by operators expanding their mobile internet capabilities.

He claimed at last week's Reuters Global Technology Summit in Paris that mobile operators had changed their priorities from investing in infrastructure to generating revenues from mobile broadband and associated services.

"Telecom operators were not engaging in 'catch-up' spending after the recession, rather it is being driven by investment in new services and technology," said Verwaayen.

However, analysts remain concerned about Alca-Lu's ability to become profitable, although the CEO again used the event to restate that the company aims to reach an adjusted operating margin of 1 to 5 per cent and roughly break-even on cash flow this year.

Verwaayen also dismissed concerns about the company's balance sheet, adding that he remained confident that no new money was required to finance day-to-day operations or restructuring costs.

On a more upbeat note, Verwaayen said that the company will stay on the look-out for small technology purchases, such as "a startup here and a startup there" to bolster its product portfolio beyond its internal research and development.

However, the CEO dismissed any notion that a large acquisition or merger was being considered. "I had to deal with complexities as the result of mergers. If I look back where the company spent its energy, it was dealing with complexity," he said. "I wouldn't want to go through that again."

For more on this story:
- see this Reuters article

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