Standard & Poor's Ratings Services has revised its outlook on Paris-based telecoms equipment maker Alcatel-Lucent to 'negative' from 'stable,' an Associated Press report said.
The ratings agency also affirmed its 'BB-/B' long- and short-term corporate credit ratings on the company. Both 'BB-' and 'B' ratings are considered non-investment, or 'junk' grade, the report said.
'The outlook revision primarily reflects our concerns about the slow pace of improvement of Alcatel-Lucent's margins and the group's large negative free cash flow,' said Standard & Poor's credit analyst Patrice Cochelin in a statement.
S&P is also concerned that the company's recently announced management changes could 'create further disruption for the company at a time when operating performance remains weak and carrier demand is softening,' he added.
Both Alcatel-Lucent's non-executive chairman and its chief executive will step down by the end of the year.