Alcatel-Lucent reported a net profit in the fourth quarter, propelling it past its goal of being near break-even for 2009. However, the company cut its forecast for 2010, citing increased competitive pressure.
For the quarter, the vendor posted a net profit of $63.2 million, just the second quarterly net profit it has recorded since 2006, when Alcatel bought Lucent Technologies. The figure is a sharp jump from the $5.07 billion net loss the company reported in the fourth quarter last year, when it was hit by heavy write-downs. Alcatel-Lucent CEO Ben Verwaayen said the company reached near break-even at an adjusted operating income level for 2009.
Sales in the quarter slumped 19.9 percent year-over-year and 7.6 percent sequentially to $5.45 billion. The company said its carrier segment saw a double-digit dip in revenue. The company's chief rivals, Ericsson and Nokia Siemens Networks, also saw declines in sales in the fourth quarter; Ericsson's sales were off 13 percent and Nokia Siemens saw its sales drop 16 percent.
Alcatel-Lucent, which is in the midst of a cost-cutting and turnaround plan, lowered its outlook for 2010. The firm predicted the overall market would grow between zero and 5 percent this year. However, the company said its adjusted operating margin would be between 1 percent and 5 percent this year--off from the company's previous prediction of 5 percent. Alcatel-Lucent said it hoped to achieve adjusted operating margins of between 5 percent and 9 percent for 2011.
The company was clearly taking the long view on its turnaround plans. "We are on a three-year path to recovery," Verwaayen said in an interview with the Wall Street Journal. "By 2011, it should be mission accomplished." Alca-Lu, which has been largely missing from recent LTE contracts in Europe, got a significant boost yesterday when AT&T Mobility selected the company and Ericsson as the primary vendors for its radio access network equipment for its planned LTE network. The two companies are also the primary suppliers for Verizon Wireless' LTE effort.
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