Alca-Lu chief holds on to WCDMA unit

Ben Verwaayen, CEO, Alcatel-Lucent, has defended the telecoms equipment manufacturer's decision to retain its loss-making unit that builds mobile network gear, the Financial Times says.

In an FR article, Verwaayen insisted the WCDMA unit is an important part of Alcatel-Lucent's plans to develop LTE.

In fact the company is trailing rivals Ericsson, Nokia Siemens Networks and Huawei by a considerable distance and there are doubts that it will ever be able to close the gap in the fiercely competitive sector.

Verwaayen said the company had more than 50 customers using its WCDMA including AT&T.

The company overall is hoping to make an operating profit this year. Industry analysts say this would be an even worse performance than 2008, the FT reports. However, by 2011, Alcatel-Lucent is seeking an operating margin in the mid to high single digits.

Analysts believe the WCDMA unit has made a loss since the merged of Alcatel and Lucent in 2006 as between them, the companies had three WCDMA product lines. The three have been reduced to two.

Unconvinced, analysts continue to urge the company to divest itself of the unit.

The company said in October that it had halved the losses, but gave no further details.