Alcatel-Lucent lowers outlook as European turmoil hits home

Alcatel-Lucent cut its profit forecast on Friday after its third-quarter revenue undershot analysts' estimates. The company further spooked the financial markets by lowering its full-year guidance, blaming economic upheaval in Europe and a fall in demand for its more mature products.

Alcatel-Lucent CEO Ben Verwaayen said on a conference call that the forecast reduction is necessary for the Paris-based company "given the uncertainties affecting Europe, and the fact that we see fourth-quarter revenue in Europe weaker than we planned," according to Bloomberg.

In an effort to boost its finances, Alcatel-Lucent plans to find additional savings of about €500 million next year as it tries to keep down costs of sales and project implementation. The savings would be specifically aimed at Europe, where spending from customers was "selective," Verwaayen said. 

In the face of Europe's growing debt crisis and an unstable regulatory environment, Verwaayen said it was increasingly difficult to predict how the overall telecom infrastructure market would react in 2012.

However, while the company saw its revenue slip 6.8 per cent to €3.8 billion following a decline across its major markets of North America, Europe and Asia, profits were helped by high-margin sales in the U.S. and strict cost controls.

In the face of this disappointing news, stock markets reacted badly and marked down Alcatel-Lucent shares by over 9 per cent.

"This is not just a weak quarter," Thomas Langer, an analyst at WestLB, told Dow Jonees Newswires. "The restructuring announcement shows that there may be more structural problems residing in Alcatel Lucent."

For more:
- see this Bloomberg article
- see this Dow Jones Newsiwres article
- see this Reuters article

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