Alcatel-Lucent, Nokia both suffer from component bottlenecks

Alcatel-Lucent (NYSE: ALU) and Nokia (NYSE:NOK) both referenced impacts on their businesses from component shortages during 2014's first quarter.

alcatel lucent CEO Michel Combes


In a call to discuss Alcatel-Lucent's first-quarter 2014 earnings with investment analysts, company CEO Michel Combes said the vendor "experienced customer components shortages during the quarter, which impacted our performance, especially in China."

According to a Seeking Alpha transcript of the call, he subsequently specified that the shortages impacted LTE rollouts in China. Combes predicted the supply situation will continue to "normalize" now through the third quarter.

Similarly, Nokia also told analysts in late April that its networks division had suffered a supply chain disruption in the early part of this year. According to a Seeking Alpha transcript of Nokia's first-quarter earnings call, newly named company CEO Rajeev Suri said Nokia's "top line performance could have been modestly higher than we delivered, but we experienced some component shortages in the quarter."

Timo Ihamoutila, Nokia's CFO, added during the same call that "mobile broadband net sales in the first quarter were adversely affected" by the components shortfall.

Both men said Nokia expects the shortages will continue through the second quarter. Nokia is "working aggressively with suppliers to address the issue," Suri said.

Infrastructure component shortages are not a new phenomenon in the wireless industry. Wireless infrastructure suppliers were hit by industrywide supply-chain issues during 2010 and again faced shortages during 2011 after Japan suffered a devastating earthquake and tsunami.

Alcatel-Lucent specifically notes in its Safe Harbor statement that component shortages pose threats to its business, saying there are potential issues stemming from the company's "reliance on a limited number of suppliers for the components we need as well as our ability to efficiently source components when demand increases."

For more:
- see this Seeking Alpha transcript and this transcript
- see this Light Reading article

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