Alcatel and Lucent, the company Alcatel is set to acquire later this year, certainly aren't giving investors a lot of faith these days. The French infrastructure provider posted an 8-percent drop in second-quarter net profit as it struggled with falling margins in the competitive wireless infrastructure space. Alcatel said net profit fell $228.7 million in the quarter from $249 million in 2005. Alcatel blamed its European vendor competitors for competing too aggressively on price to gain market share, primarily in the GSM market. "Some prices in new contracts, for instance in Latin America, are becoming extravagant, and we decide not to go into it. Our customers are not naïve enough to let us recover bountiful margins later on. Competition is quite strong, particularly from established players," said Alcatel CEO Serge Tchuruk during the company's conference call with analysts.