Alcatel-Lucent chief defends Nokia deal after revealing higher net loss in Q1

Alcatel-Lucent CEO Michel Combes said a proposed take over by Nokia Networks is not affected by the companies' respective earnings in the opening quarter, after the French-U.S. equipment vendor's net loss increased year-on-year.

The vendor on Thursday revealed its first-quarter net loss increased from €68 million ($76.4 million) in the first quarter of 2014 to €78 million in the recent period, as a higher cost of sales offset revenue growth. Alcatel-Lucent generated revenues of €3.2 billion in the recent quarter, up from €2.9 billion in Q114.

However, Nokia's performance in the opening quarter led to some awkward questions for Combes during a media call to discuss Alcatel-Lucent's Q1 earnings. The CEO said the €15.6 billion deal cannot be judged on the performance of either company in just one quarter, noting that both vendors are standing by full-year forecasts following the period, Reuters reported.

Alcatel-Lucent shareholders are concerned because Nokia Networks registered a 61 per cent year-on-year drop in non-IFRS operating profit in the first quarter. In contrast, Alcatel-Lucent reduced its operating loss from €59 million in Q1 2014 to €16 million in the recent period.

Exane BNP Paribas analysts Alexander Peterc hailed Alcatel-Lucent's Q1 performance relative to Nokia and Ericsson, and noted that Nokia's shareholders are getting a "pretty good deal" in terms of the acquisition as a result, Bloomberg reported.

A breakdown of the company's Q1 2015 revenue reveals core networking revenues increased 7 per cent year-on-year to €1.4 billion. IP routing revenues grew 6 per cent to €583 million, and IP transport revenues were up 8 per cent at €492 million.

The vendor's Access business generated revenue of €1.7 billion in the opening quarter, up 13 per cent on Q1 2014. The division also overturned an operating loss of €37 million in Q1 2014 with an operating profit of €67 million in the recent quarter.

For more:
- see Alcatel-Lucent's earnings statement [PDF]
- view this Reuters article
- read this Bloomberg report

Related Articles:
Mallinson: Nokia, Alcatel-Lucent and the last of the network equipment mega-mergers
Nokia and Alcatel-Lucent: the French connection
Ericsson comes under spotlight after Nokia-AlcaLu unveil plans to merge
Nokia plans to buy Alcatel-Lucent in €15.6B deal
Nokia, Alcatel-Lucent confirm talks to create world's largest wireless network gear vendor

Suggested Articles

Wireless operators can provide 5G services with spectrum bands both above and below 6 GHz—but that doesn't mean that all countries will let them.

Here are the stories we’re tracking today.

The 5G Mobile Network Architecture research project will implement two 5G use cases in real-world test beds.