Alcatel shares dip due to profit decline

Alcatel shares tumbled after the French telecom equipment maker posted a 16.1% decline in quarterly net profit, despite strong growth in its fixed-line business, an Associated Press report said.

The report said shares in Alcatel SA dropped 6.3% to 11.70 euros ($14.54) in Paris after the company said January-March net profit fell to 104 million euros ($129 million) from 124 million euros in the first quarter of 2005.

Results for the year-earlier period had been inflated by a one-time 69 million euros ($86.43 million) in capital gain. The latest figures showed a sharp increase in revenue from fixed-line equipment sales, on strong demand for fast-growing "triple-play" services combining Internet, phone and TV, the report said.

Overall revenue jumped 17.6% to 3.07 billion euros ($3.81 billion), helped by a 29% surge in fixed-line sales to 1.27 billion euros ($1.58 billion), the report said.

Alcatel's operating margin, or earnings before interest and taxes as a share of revenue, rose to 6.5% from 4.1% a year earlier, but missed the 8% expected by some analysts, who cited investor concern about increased price competition as a reason for the shares' decline, the report further said.