Alcatel-Lucent hit by component shortage, slumps to wider loss

Alcatel-Lucent (NASDAQ: ALU) said a component shortage in the first quarter meant it was unable to fulfill some orders from customers, leading to a decline in revenue and a wider net loss.

The company--which has posted a quarterly profit only twice since 2006, when Alcatel bought Lucent Technologies--said its first quarter net loss came in at $660.3 million, wider than the $515.4 million loss it recorded in the year-ago period. The net loss was more than double what analysts had been expecting, according to Bloomberg.

Alcatel-Lucent CEO Ben Verwaayen said the vendor suffered from a component shortage. "We have enough of the high-end chipsets that we build ourselves. But in the more general components, we compete for supply with other industries like cars and consumer electronics, and they are all recovering at the same time as us," he said, according to Reuters. "That has caused us some headaches."

Company revenue dipped to $4.16 billion, down 9.8 percent from $4.61 billion in the year-ago period. Revenue was down 18 percent from the fourth quarter. Both of the company's larger European rivals--Ericsson (NASDAQ: ERIC) and Nokia Siemens Networks--saw their sales drop 9 percent in the first quarter.

Despite the weak performance, Verwaayen forecast "strong sequential recovery" in the next few quarters due to "strong demand in the market benefiting from the explosion of mobile data on networks." He said the firm is seeing recovery in the equipment market, especially in North America, driven by IP, terrestrial optics, WCDMA and LTE. Alcatel-Lucent scored a major LTE contract win in the quarter from AT&T (NYSE: T).

The vendor reiterated its outlook for 2010, and said that the overall equipment market will grow between 0 and 5 percent this year, while the company itself aims to reach an adjusted operating margin of between 1 and 5 percent.

For more:
- see this FierceWireless Q1 earnings page
- see this release
- see this Reuters article
- see this Bloomberg article

Related Articles:
Alcatel-Lucent posts a profit, but cuts 2010 outlook
Ericsson, Alca-Lu score LTE deal with AT&T
Alca-Lu posts wider loss, but reiterates forecast
Alcatel-Lucent posts profit on asset sales

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