Alcatel-Lucent posts profits of $62M but margin decline causes concern

Although Alcatel-Lucent (NASDAQ:ALU) posted a net profit of $61.49 million and revenues of $5.5 billion in the second quarter, shares of the company's stock plunged amid concerns that the firm's margins are declining. The company's operating margin was 1.9 percent in the quarter, which is half of what analysts had forecast.

Alcatel-Lucent said that its revenue was up 10.4 percent over the previous year's quarter and up 7.6 percent sequentially.  In addition, its adjusted operating income was $154.46 million, or 2.8 percent of revenues.

The telecom infrastructure maker said that growth in the U.S. and Asia helped the company meet its targets, and CFO Paul Tufano told MarketWatch that the company is bullish on the U.S. market and expects it to remain strong in the second half of the year.

 The company said its networks division had revenues of $3.539 billion in the quarter, a 7.4 percent increase compared to 3.295 billion in the year-ago quarter.

Alcatel-Lucent's wireless division saw its revenues increase 5.7 percent from the year-ago quarter to $1.543 billion. The company said the increase was in part due to its EV-DO business in the Americas and its LTE business.

CEO Ben Verwaayen said that the company is still targeting an adjusted operating margin of more than 5 percent and said it still aims to outperform the telecom equipment and related services market which is estimated to grow around 5 percent.

Verwaayen added that the company's U.S. business remains strong.

For more:
- see this release
- see this MarketWatch article
- see this WSJ article (sub. req.)
- see this Bloomberg article

Special Report: Wireless in the second quarter of 2011

Related articles:
Alcatel-Lucent benefits from U.S. LTE demand, narrows its Q1 losses
Top wireless companies report strong R&D spending in 2010
Verizon opens LTE Innovation Center, expands network to 100 markets

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