Alcatel-Lucent's Combes: We're 'back in the game,' plan to woo non-carrier customers

Alcatel-Lucent (NYSE: ALU) CEO Michel Combes said that the vendor is "back in the game" in terms of competing with its top rivals and that the company is looking, like other gear makers, for non-carriers customers. After skirting with financial disaster and undergoing a massive restructuring, Combes seemed to be brimming with confidence about Alcatel-Lucent's prospects.

CEO Michel Combes

Combes

"It's now that it starts to be exciting," Comes said, according to Mobile World Live. Combes was speaking last week at the company's Technology Symposium in New Jersey and at its first investor day in seven years. "In the past 18 months when we asked people for efforts just in order to recover, that's not easy. But now that we are back in the game, we have the ability to really regain the leadership position that we had in this industry in the past, and contribute to the shaping of the market."

It was not that long ago that Alcatel-Lucent was in dire financial shape. In December 2012 the company took out a $2 billion loan to bolster its finances, and used its patent portfolio and other assets as collateral. As recently as October 2013 Combes said the company "could disappear" because of its history of financial losses.

Now that the company is ending its latest restructuring, dubbed the Shift Plan, the vendor is starting to see results. The goal of the program is to return the company to being positive cash flow in 2015. Under the program, Alcatel-Lucent has focused on IP networking, broadband access, LTE and small cells, as well massive cutting of fixed costs and jobs.

Combes confirmed to Bloomberg that the company will be profitable this year and generate positive free cash flow in 2015. "Now that that transformation is done, we need to look at how to unlock growth--profitable growth," he said, according to Mobile World Live. "Because of course I'm not interested in growth for growth, I'm interested in what is profitable for the company and makes sense for our customers."

As part of that shift, Combes said Alcatel-lucent is looking beyond traditional telcos as customers. That's a strategy that rivals Ericsson (NASDAQ: ERIC) and Nokia (NYSE:NOK) have embraced as well. For example, Ericsson expects that by 2020 it will generate 20 to 25 percent of its revenue from non-operator customers, up from 10 percent in 2013.

Combes told Bloomberg that he sees a "massive appetite" for new business from the likes of banks, cable operators and Internet companies. "We've done what it takes on the cost front, but a cash flow target isn't enough to mobilize a company," he said after returning to Paris from New Jersey. "The next chapter for us is about innovation and growth."

That's especially important for Alcatel-Lucent, which has relied heavily on sales to U.S. carriers that are now starting to pull back on network spending after years of investing in LTE networks. Combes said Comcast (NASDAQ: CMCSA), Banco Bilbao Vizcaya Argentaria and Airbus were among customers presenting alongside Alcatel-Lucent this week at the symposium. Further, Combes said Alcatel-Lucent has signed as many as 15 non-carrier customers since he joined the company in April 2013.

Perhaps befitting Alcatel-Lucent's newfound confidence, Combes said that while he respects all of the company's competitors, the firm has "some unique capabilities" as well as a "clear vision of networks, from core to integrated metro, to access with wireline as the major piece as it also supports wireless backhaul, and small cells."

"Our competitors are strong in certain areas. Ericsson is very strong in RAN, but do they have real capabilities on the full IP network? Cisco is strong on the core, but it has to move from a legacy architecture to the new type of architecture we have presented," he said, according to Mobile World Live. "Cisco is still trying to push back this virtualization evolution because it doesn't want to lose its core business but we are going to fight against them big time. [Huawei is] probably the ones that have a portfolio that is not completely aligned with us, but the closest in terms of skills and capabilities."

For more:
- see this Bloomberg article
- see this two separate Mobile World Live articles

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