Alcatel-Lucent (NYSE:ALU) posted its first quarterly net profit in two years in the fourth quarter of 2013, and said its turnaround under the "Shift" plan led by CEO Michel Combes is on target. In the fourth quarter the vendor's North American sales inched up and the company's overall margins widened.
For the fourth quarter Alcatel-Lucent reported a net profit of around $181.6 million, compared to a year-ago quarterly loss of $2.11 billion, when the company was hit with restructuring and impairment charges. Total sales in the quarter fell 4.1 percent to $5.32 billion, but the company said year-over-year revenue was flat at constant exchange rates. The firm's operating margin widened by 5 percentage points to 7.8 percent, a trending improvement Combes said will continue.
In North America, the company's largest region by sales, revenue grew 2 percent year-over-year at constant exchange rates to $2.1 billion in the fourth quarter. Sales in Asia-Pacific climbed 10 percent from the year-ago period, driven by network rollouts in China, but sales in Europe fell slightly and sales in the rest of the world dropped by 16.5 percent.
Alcatel-Lucent said revenues for its Wireless Access division clocked in at $1.68 billion, up 15 percent at constant exchange rates from the year-ago period, with LTE revenues more than doubling, driven by large deployment activities in the U.S. and China. For the full year, Alcatel-Lucent said its LTE business grew more than 70 percent year-over-year, with contract wins from China Telecom, Setar in Aruba, YooMee in Africa, Lazus in Colombia or Osnova in Russia. The company said this performance was partially offset by continued declines in 2G and 3G technologies, particularly CDMA, which represented less than 15 percent of wireless revenues in fourth quarter. The company also said it saw continued momentum in its small cell business, as evidenced by a recent win with China Mobile for its TD-LTE network.
Last fall the company said it would cut 15 percent of its workforce, or 10,000 jobs, as part of its Shift reorganization plan aimed at slimming down the company as it seeks to become more of a specialist focused on IP networking, LTE and small cells.
The vendor said it achieved fixed costs savings for 2013 of around $492 million, of which around $141 million came in the fourth quarter.
"The growth of our gross margin is robust and sustainable--we're on our way to continue to improve it in the next couple of years," Combes said during a conference call, according to Bloomberg. "I intend to continue to regain commercial traction without sacrificing our gross margins."
Meanwhile, the firm said it received a binding offer for its enterprise business from China Huaxin, a state-backed technology investor, valuing the unit at $363 million, including debt. Alcatel-Lucent will keep a 15 percent stake in the division. The deal is expected to close during the second quarter.
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