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.
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