Alcatel-Lucent posts Q4 profit of $1.1B, will license patents

Alcatel-Lucent (NASDAQ:ALU)  posted a $1.1 billion profit in the fourth quarter and its first annual profit in six years despite falling revenue. The infrastructure vendor also said it will open up its patent portfolio for licensing.

The Franco-American vendor, unable for years to generate consistent profits, reported a large upswing in net profit for the quarter compared with a profit of $49 million in the year-ago period. The vendor's bottom line was aided by a gain on deferred tax assets in the United States. For the full year, Alcatel-Lucent reported a net profit of $1.44 billion, compared with a $440 million annual loss in 2010.

Despite the rosy financials, the company's sales declined 13 percent to $5.4 billion in the fourth quarter. Alcatel-Lucent said revenues for its wireless division came in at $1.18 billion in the quarter, down 22.8 percent from the year-ago period. The company said it saw weakness across most parts of the wireless business after several quarters of strong activity, with the exception of small/femto cells as well as GSM in the Asia-Pacific region. Alcatel-Lucent said spending slowed in the Americas in the latter part of the year, which might have been partly a result of AT&T (NYSE: T) cutting network spending in anticipation of its $39 billion bid to acquire T-Mobile USA, which AT&T abandoned in December.

CEO Ben Verwaayen said there is more work that needs to be done to improve the company's overall position. "Our aim was to be a so-called normal company by the end of 2011, and we didn't make all our targets there, that is fair to say," he said, according to Reuters. "So we are moving on, and we are confident that we will make more improvements this year and more progress."

Interestingly, Alcatel-Lucent said it will look to monetize its portfolio of more than 29,000 patents, another indication of the growing strategic importance of wireless patents. In that sense, Alca-Lu is following the lead of Ericsson (NASDAQ:ERIC), which recently adopted a similar strategy. Alcatel-Lucent will license its patents through licensing syndicate RPX Corp., and the vendor aims to generate "significant" revenue from the rights to its patents, CFO Paul Tufano said.

Alcatel-Lucent also reconfirmed that it plans to pursue $663 million worth of cost savings in 2012 in both fixed and variable costs. Union officials in Europe have reportedly said the firm plans to reorganize its operations and may cut up to 1,800 jobs in Europe through firings and job relocations. However, the company, which employs 25,000 people in Europe, insisted that it is not cutting jobs but is instead "repositioning" jobs. "No global restructuring program is under way," a spokeswoman told the Wall Street Journal. The company is "focusing on applying [its] internal job market to reposition talent where it can be most effective."

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

Special Report: Wireless in the fourth quarter of 2011

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