Competition drags down Alcatel profits

Alcatel, which is in the process of merging with rival Lucent, posted an 8% drop in second-quarter net profit as it struggled with deteriorating margins in the competitive wireless infrastructure business, an Associated Press report said.
The report said the French firm also predicted that operating profit would hardly change in the third quarter from the 263 million euros ($331 million) posted in the second quarter.
Net profit fell to 180 million euros ($226.6 million) in the second quarter from 196 million euros (248.5 million) a year earlier, even padded by a gain of 12 million euros ($15 million) from the sale of fixed assets, the report said.
Sales rose 7.6% to 3.38 billion euros ($4.25 billion), buoyed by continued strong growth of broadband Internet equipment at the fixed-line unit.
According to the report, margins across the industry are being hit by intense price competition as several players, including low-price Chinese vendors, are moving aggressively to gain market share and build a position in new markets.
Alcatel's operating margin came in at 7.8%, the report said.

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