Complications pull down Alcatel-Lucent shares

Tougher competition and complications from its $11.6 billion merger hit Alcatel-Lucent's revenue and wiped out fourth-quarter profit, sending its shares plummeting less than two months after the company's creation, an Associated Press report said.

The Associated Press report said Alcatel-Lucent' revenue, calculated as if the tie-up had taken effect previously, fell 16% to 4.42 billion euros ($5.72 billion) in the October-December period from 5.25 billion euros ($6.8 billlion) a year earlier.
Operating income was 'approximately at break-even' after a 570 million euros ($742 million) profit in the fourth quarter of 2005, the report said.

Shares of Alcatel-Lucent fell $1.04, or 7.3%, to close at $13.15 on the New York Stock Exchange.

The revenue shortfalls are 'astonishing,' investment bank Dresdner Kleinwort was quoted as saying. 'Massive market share losses are in clear evidence.'

Full-year pro-forma revenue fell to 18.3 billion euros ($23.7 billion) from 18.6 billion euros ($24.2 billion) in 2005, Alcatel-Lucent's statement also said, but sales growth is expected to resume this year.

The report further quoted CEO Patricia Russo as saying that implementation of the 'largest merger to date in our industry' had created short-term uncertainty among Alcatel-Lucent customers and staff.

'In addition, the last quarter of the year proved to be challenging from a market perspective, driven by a shift in spending from some of our large North American customers and heightened competition in the global wireless market,' Russo said.