AlcaLu returns to black but falls short

Alcatel-Lucent’s stock fell 11% Thursday after its Q3 result missed expectations, despite announcing a small profit and higher sales.
 
It announced earnings of €25 million compared with a €182 million loss in the same period last year.
 
The French vendor revealed revenue of €4.07 billion, up 10.5% year-over-year and 6.8% sequentially. To underscore what it expects to be a strong quarter in sales, it unveiled new US and Chinese contracts worth $5.7 billion (€4.0b).
 
But the operating profit of €61 million, on the back of a 33.8% gross margin – down from the previous quarter and a year ago - was below analysts’ expectations, FT.com reported.
 
The company maintained its full-year outlook. CEO Ben Verwaayen said he expected “a significant sequential increase” in top line revenue in the fourth quarter.
 
Revenue growth came mainly from the demand for IP and mobile networks, as well as for managed services.
 
“From a geographic standpoint, on top of the established strong dynamic in North America, we experienced good growth in India, China and Russia fuelled by our recent contracts wins and better market conditions,” the CEO said.
 
 
“We improved our overall profitability sequentially and year over year even though our product and geographic mix was less favorable than in the second quarter of 2010.”
 
Alcatel-Lucent shares on the NYSE fell 8.96% and then 2.46% in after-hours trading to $3.17.
 
Separately, the vendor announced a four-year 3.5G/4G contract with Verizon Wireless worth $4 billion (€2.8b). The deal will cover CDMA and LTE radio solutions, IP and backhaul and professional services. 
 
It also revealed frame agreements worth €1.18 billion ($1.7b) with all three Chinese operators. The China Mobile deal is worth €530 million, the China Telecom contract €343 million and the China Unicom €305 million.
 
The agreements will be signed in Paris today during the visit of Chinese President Hu Jintao.

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