Alca-Lu CEO: 'I'm pleased with progress'; but shares fall on poor results

Despite being able to announce that it, along with Ericsson, had been selected to provide AT&T with LTE technology, Alcatel-Lucent could not disguise the fact that it was still struggling to regain profitability. The company reported a full-year loss of US$524 million and declared that no dividend would be paid.

The ever-optimistic Ben Verwaayen, Alca-Lu chief executive, claimed that the company had met his target to be around break-even at the level of adjusted operating profit in 2009, partly because of cost-cutting. "We delivered on our commitments for 2009 and I am pleased with the operational progress we have made," he said.

However, Alca-Lu's CFO, Paul Tufano, spoilt the party somewhat by adjusting the margin forecast for 2010 from a target of 5 per cent to a range between 1 per cent and 5 per cent. While Tufano maintained that this move was ‘prudent', the stock market viewed it differently and drove down the share by nearly 7 per cent. "Even if the market never really believed in the previous guidance, lowering a target is never good news," was one analyst's viewpoint.

But there was some good news in that the company had exceeded its cost savings target for 2009 with about €950 million of savings completed at the end of the year. In 2010, the group aims for additional cost savings of between €300 million and €400 million, Tufano said.

But the pressure on the company's core network equipment business was underlined by how its revenue fell 28 per cent in the fourth quarter. Revenue from mobile network equipment fell 38 per cent. Richard Windsor, technology specialist at Nomura, said Alca-Lu's fourth-quarter revenue missed his forecast, and concluded the company had lost market share outside North America.

For more on this story:
Financial Times and Total Telecom

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