Alcatel profit drops 42% in Q3

French telecom gear maker Alcatel, which is buying US rival Lucent Technologies, posted a 42% decline in third-quarter profit, mainly due to falling sales and profitability of its mobile network equipment, an Associated Press report said.

Net profit came to $195 million or 14 US cents per share in the July-September period, from $334.15 million, or 24 US cents per share, in the same period last year. Revenue rose 1.4% to $4.19 billion from $4.13 billion, the report said.

Alcatel shares jumped 5.2% to $12.68 in Paris trading despite disappointment with the company's mobile performance. Some analysts credited better-than-expected results from Lucent's wireless CDMA business, announced simultaneously in New Jersey.

Profitability at Alcatel's largest division, fixed communications, was lifted by strong demand for industrial equipment offering IP-based television and phone services as well as Web access through a single household connection, the report said. Operating profit at the division grew 25% to $190 million on almost flat revenue of $1.71 billion.

But the mobile division's weak figures 'partially erased' the fixed-line performance, chairman and chief executive Serge Tchuruk was quoted as saying.

Slow uptake of much-trumpeted 3G phone services such as video downloads and live streaming had been compounded by a slump in demand for older second-generation equipment, as coverage approached saturation even in many emerging markets, the report said.

Mobile equipment sales dropped 8.9% to $1.25 billion, and operating profit plunged 45% to $80 million. The division's operating margin fell to 6.4% from 10.6%, the report said.