Alcatel-Lucent plans strategy review after Q1 loss

Alcatel-Lucent posted a loss of €353 million in the first quarter of 2013 as the equipment manufacturer continues to burn through cash at an alarming rate, and said it would undertake a review of its strategy by early this summer.

The troubled company, which has struggled with a high cost base since it was founded in 2006, said it burned through €533 million of cash in the first quarter, Reuters reported.

This was partly due to the timing of payments from customers, Reuters quoted CFO Paul Tufano as saying. The first-quarter loss represents the fourth consecutive quarterly loss, as well as a turnaround from a profit of €259 million a year earlier. At the same time, the operating loss narrowed to €202 million from €298 million a year earlier.

As it presented its results, new CEO Michel Combes also said he plans to complete a review of the vendor's business in the next few months. "We are actively reviewing the group's businesses and operating model to design the conditions for value creation in the future," Combes said in a statement on the first-quarter results. "I am looking forward to sharing the outcome in early summer."

Alcatel-Lucent is already implementing a plan to slash more than 5,000 jobs and expenses by €1.25 billion a year, and said €122 million of the first-quarter loss was linked to these measures.

One positive development in the first quarter was that sales of network equipment to large network operators increased by 4.2 per cent compared to a year ago, mainly as a result of contracts in North America. Overall revenue increased by 0.6 per cent to €3.23 billion.

In his first month as CEO of the company, Combes has already made it clear that he plans to accelerate the cost-cutting exercise in an effort to reverse the company's fortunes, thereby achieving what his predecessor Ben Verwaayen failed to do during his five-year tenure.

Asset sales have also not been ruled out. Indeed, in a separate development this week, the vendor sold ProgrammableWeb, the online repository of application programming interfaces (APIs) it acquired in 2010, to enterprise app integrator MuleSoft, in a move that has some industry observers wondering if this could be the start of a wave of asset sell-offs, according to Light Reading.

For more:
- see this Reuters article
- see this Bloomberg article
- see this Wall Street Journal article
- see this Light Reading article

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