Alca-Lu posts second consecutive loss

Alcatel-Lucent is considering options including asset sales to aid in its turnaround, following its second straight quarterly loss.
 
The company reported a net loss for the third quarter of €146 million ($187.2 million), from a €194 million profit a year earlier.
 
Revenue declined 2.8% to €3.59 billion, with network equipment revenue shrinking 11.9% due largely to depressed spending in APAC, North America and Europe.
 
Wireless revenue was particularly hard-hit, falling 18.9% year-on-year. Announcing its results, Alcatel-Lucent said it had been a difficult quarter for its wireless business, due to cautious spending from operators.
 
The company said its wireless revenues had been impacted by “an accelerated technology shift from 2G/3G to 4G,” in a tacit acknowledgement of its weakness in the segment, but added that its LTE business showed “year-over-year stability” during the quarter.
 
As with rival Ericsson, Alcatel-Lucent experienced significant margin pressure during the quarter. Alcatel-Lucent's gross margins decreased to 27.9% in Q3 from 35.3% a year earlier.
 
Alcatel-Lucent CEO Ben Verwaayen said the results “are reflective of the significant transformation we are undertaking both in terms of scope and timing.”
 
“In addition, our revenue growth and gross margin were impacted by overall carrier spending dynamics and product mix, especially in wireless.” 
 
He said the company is making good progress with the up to €1.2 billion restructuring program announced in July, achieving cost savings of €450 million since the start of the year. But restructuring costs required total cash outlays of €93 million during the quarter.
 
To accelerate the turnaround, the company may pursue more asset sales or a debt reprofiling, CFO Paul Tofano told investors. But he added that the company is facing no immediate debt cliff.

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