The recent merger of Alcatel-Lucent apparently is causing some uncertainty among customers and putting a dent in the firm's sales and profits. The firm issued a statement today warning of a fourth-quarter slump in operating profit and said that 2006 revenue would be flat.
The company's stock dropped on the news. At mid-day it was down to $13.03 from a Jan. 22nd close of $14.19.
CEO Patricia Russo blamed the slump on spending shifts among customers in North America and increased wireless competition worldwide. In addition, she said that the recent merger, along with the company's acquisition of Nortel's UMTS business, has created some uncertainty for customers and employees. Nevertheless, she said that Alcatel-Lucent would resume its growth this year.
The company also said it will squeeze an additional €200 million ($260 million) to its already anticipated cost savings of €400 million ($520 million) in 2007. Analysts are speculating that the cost savings will come in the form of layoffs.
For more on Alcatel-Lucent's troubles:
- here's an article from the WSJ (sub. req.)