Alcatel-Lucent struggles in Q2 with loss

Alcatel-Lucent claims that it is on track to break even for the full year despite posting a second quarter operating loss.

The vendor reported  a fall in group revenue to  €3.9 billion for Q2, down 4.8% compared to the same quarter last year. The decline was attributed largely to a 10.3% sales drop in the group’s carrier unit  reflecting a slow down in equipment supply. Net income of €14 million was a huge improvement on last years €1.1 billion loss.

The carrier unit experienced a revenue drop of 26.3% in its fixed provisioning and a drop of 5.3% in sales for mobile infrastructure. The services unit , which offers managed and professional services to carriers, however boasted a 7.9% rise in sales.

Alcatel-Lucent CEO Ben Verwaaayen said  “looking forward, market conditions remain difficult and operators continue to be selective about their investments. We reiterate our view that our addressable market should be down between 8% and 12% at constant currency in 2009. As we look forward to the second half, we expect to achieve our target of an adjusted operating income around breakeven through further improvement in our margins and expense structure.”

Globally Alcatel-Lucent witnessed a  rise in activity in Asia with a 9.3% increase in sales with flattish results in North America and a fall of 12.8 % in Europe.

The vendor said progress was being made on its cost reduction plan which has included headcount reductions, contractor reductions, co-sourcing, facility consolidation, reducing the use of agents, reducing commissions, and finding other operational efficiencies.

The company reported that it had achieved around 35% of its plan to reduce costs and expenses by €750 million by the fourth quarter 2009.

 

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