Alcatel-Lucent reported a quarterly profit for the first time since the company was formed in 2006, largely based on asset sales. However, the equipment vendor posted sales declines and indicated that it expects the network infrastructure market to decline this year.
The company had a net profit of $19.6 million in the quarter, compared with a net loss of $1.54 billion in the year-ago quarter. The company had after-tax gains of $389 million and posted its profit on sales of both its satellite business and its stake in the French defense contractor Thales.
The company's stock was up almost 10 percent on the news to around $2.77 per share.
"As we look forward to the second half, we expect to achieve our target of an adjusted operating income around breakeven through further improvement in our margins and expense structure," CEO Ben Verwaayen said in a statement. He said the company was seeing positive trends in its sales, gross margin and operating expenses.
Despite the positive earnings, the vendor reported revenue of $5.49 billion, down 4.8 percent from the year-ago quarter when it had $5.76 billion, but up from the first quarter's $4.81 billion in revenue. The company's carrier business saw sales decline 10 percent, for an operating loss of $191 million.
Verwaayen said that the company expects the infrastructure market to decline 8 to 12 percent this year. He added that he still needs one or two more quarters to get a better grasp on how the market will trend in 2010.
In December, Alcatel-Lucent announced it planned to cut costs by more than $1 billion and cut 16,500 jobs by year end.
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