Light Reading
As first-quarter losses hit $460 million, new CEO Michel Combes reviews AlcaLu's assets and operating model

Alcatel-Lucent CEO Preps Kill List

Ray Le Maistre
4/26/2013
50%
50%

It looks like make or break for Alcatel-Lucent in 2013. The company has started the year with a first-quarter net loss of €353 million (US$460 million) and a strategic review of its businesses and operating model, the results of which are set to be unveiled by new CEO Michel Combes in "early summer." The vendor has already offloaded one small asset this week and a fresh review of the company's multiple operating units was inevitable. (See Euroblog: Combes Clearout? and AlcaLu Sells Off Its API Repository.) Now the company's staff, customers, partners and rivals will be scouring the first-quarter results, looking for clues as to which of the vendor's operations might get harpooned with a "For Sale" or "Closure" sign. The vendor has already put some units on the block, having created a "Focused Businesses" business group for the Enterprise, Submarine and the Strategic Industries units that collectively performed badly during the first quarter, with revenues down 22 percent year-on-year to €244 million ($318 million). (See Alcatel-Lucent Sharpens Its Focus.) But it's the Networks & Platforms business group that will likely get the most attention from Combes, as it forms the rump of the company. In the first quarter it generated revenues of €2.7 billion ($3.52 billion), 84 percent of the company's total revenues of €3.23 billion ($4.2 billion). (In both cases, those figures were slightly better than a year ago.) On the evidence of the first quarter, the optical equipment division within that group might have something to worry about: Its revenues fell by 15.6 percent compared with a year ago to €342 million ($446 million), while the rest of the Networks & Platforms divisions (including IP, wireless and fixed networks) all reported sales growth compared with a year ago. To put the optical division's performance into even clearer perspective, one of its main rivals just reported a better than expected first quarter and a bullish outlook for the full year. (See Infinera Prepares for a Big 2013.) So what's the deal with the optical equipment business? Alcatel-Lucent says it's being dragged down by its legacy product lines. Here's the official explanation:

    Revenues for the Optics division were Euro 342 million, a decrease of 15.6% from the year-ago quarter. We continued to witness declines in our legacy equipment, which now represents 30% of our optics product revenues, partially offset by growth in WDM in both our Europe and APAC regions. Our 1830 Photonic Service Switch continues to grow as a percentage of optical revenues, reaching 36% in the first quarter, as sales grew at a high double-digit rate compared to the year-ago quarter. The relative share of 100G shipments has also continued to increase, from 12% in 2012 to 19% in the first quarter of 2013. Traction with our 400G Photonic Service Engine has also been confirmed, with the recent completion of successful 400G trials with Shaw Communications in Canada, France Telecom/Orange and Telefónica España.
The bottom line for Combes is that he needs to show the board, investors, customers and partners that he can revive Alcatel-Lucent's fortunes and instill confidence that the company has a long-term, profitable future. To do that, the financials need to improve significantly. While first-quarter total revenues were up 0.6 percent to €3.23 billion, the gross margin slipped to 29.4 percent from 30.2 percent a year ago. While the operating loss, at €202 million ($263 million), was an improvement compared with 2012's first quarter, the net loss of €353 million was in stark contrast to last year's net profit. In addition, the vendor ended the first quarter with a net debt of €358 million ($466 million), having burned €505 million ($657 million) of cash during the first three months of this year. That cash-burn figure includes restructuring, capital expenditure, tax and interest costs in addition to the quarter's operating losses. Combes will know the company can't continue in this vein. In the meantime, he'll be aware that AlcaLu's share price has dipped 2.4 percent Friday morning on the Paris exchange to €1.06, giving the company a market value of less than €2.5 billion ($3.25 billion). — Ray Le Maistre, Editor-in-Chief, Light Reading

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
DanJonesLRMobile
50%
50%
DanJonesLRMobile,
User Rank: Light Sabre
4/26/2013 | 6:31:43 PM
re: Alcatel-Lucent CEO Preps Kill List
I presume the LightRadio line is safe for now, right?
Ray Le Maistre
50%
50%
Ray Le Maistre,
User Rank: Light Sabre
4/26/2013 | 11:46:16 AM
re: Alcatel-Lucent CEO Preps Kill List
Surely he is going to make his mark and have a different view, coming from outside the company? I think we might be in for some minor shocks.
^ip4g^
50%
50%
^ip4g^,
User Rank: Lightning
4/26/2013 | 10:46:31 AM
re: Alcatel-Lucent CEO Preps Kill List
... yes that would be the natural progression and end up with Fixed Broadband, Optics and IP. But then is that not pretty much what Alcatel had earlier.
In any which ways this is what logic suggests.. But then there could be some creative and radical thinking which Combes has up his sleeves.
Flash Poll
LRTV Custom TV
Distributed NFV-Based Business Services by RAD

7|18|14   |   5:38   |   (0) comments


With the ETSI-approved Distributed NFV PoC running in the background, RAD's CEO, Dror Bin, talks about why D-NFV makes compelling sense for service providers, and about the dollars and cents RAD is putting behind D-NFV.
LRTV Custom TV
MRV Accelerating Packet Optical Convergence

7|15|14   |   6:06   |   (0) comments


Giving you network insight to make your network smarter.
LRTV Custom TV
NFV-Enabled Ethernet for Generating New Revenues

7|15|14   |   5:49   |   (0) comments


Cyan's Planet Orchestrate allows service providers and their end-customers to activate software-based capabilities such as firewalls and encryption on top of existing Ethernet services in just minutes.
LRTV Custom TV
Symkloud NVF-Ready Video Transcoding, Big Data

7|9|14   |   3:41   |   (0) comments


Kontron and ISV partner Vantrix demonstrate high-performance video transcoding and data analytic solutions on same 2U standard platform that is ready for SDN and NFV deployments made by mobile, cable and cloud operators.
LRTV Huawei Video Resource Center
The Evolving Role of Hybrid Video for Competitive Success

7|4|14   |   4:09   |   (0) comments


At Huawei's Global Analysts Summit in Shenzhen, China, Steven C. Hawley from TV Strategies speaks to us about the evolving role of hybrid video for competitive success.
LRTV Huawei Video Resource Center
How CSPs Leverage Big Data in the Digital Economy

7|4|14   |   4:48   |   (2) comments


Justin van der Lande from Analysys Mason shares with us his views on how telecom operators can leverage customer asset monetization with big data. His discusses the current status of big data applications and the challenges and opportunities for telecom operators in the digital economy era.
LRTV Huawei Video Resource Center
Accelerator for Digital Business Future Oriented BSS

7|4|14   |   3:08   |   (0) comments


Mobile and internet are becoming intertwined; IT and CT are integrating; and leading CSPs have begun to transform to information service and entertainment providers. How should the BSS system evolve to enable this transformation? Karl Whitelock, an analyst at Frost & Sullivan, shares his views.
LRTV Huawei Video Resource Center
Orange Tunisia Discusses Multi-Band Antenna With EasyRET Solution

7|4|14   |   2:45   |   (0) comments


As new site acquisition becomes more difficult, Orange Tunisia has requested multi-band antenna to support UMTS and LTE innovation. Some things considered include reducing the cost of antenna maintenance and having high reliability antenna and EasyRET solution.
LRTV Huawei Video Resource Center
How Telefonica Spain Considers Antenna Selection for LTE Network Deployment

7|4|14   |   2:19   |   (0) comments


Tony Conlan, Global CTO of RAN, Telefonica, shares his opinion on antennas in LTE network deployment: Tower space is the premier requirement on antennas; reliability is important to reduce OPEX; and EasyRET solution will be helpful for antenna maintenance.
LRTV Huawei Video Resource Center
dtac Thailand: Multi-band Antenna & Capacity Solution for a Better MBB Experience

7|3|14   |   3:45   |   (0) comments


With the development of LTE, tower space and load are limited for new antenna, but users' capacity requirements are growing fast. To provide a better MBB experience, Panya Vechbanyongratana from dtac Thailand shared his experiences and antenna requirements.
LRTV Documentaries
BTE Panel: Network of the Future

7|2|14   |   1:00:57   |   (0) comments


Full-length video of the ATIS Panel Discussion: 'How Far Away Is the Network of the Future & What Does It Look Like?' from the Big Telecom Event (BTE) in Chicago.
LRTV Custom TV
Redknee Supports BH Telecom With Redknee Unified

7|2|14   |   6.14   |   (0) comments


Lucas Skoczkowski, CEO of Redknee, and Amir Orucevic, Director BH Mobile, discuss how the benefits of the Redknee Unified suite of products provide BH Telecom with innovation and leadership in the market, with the flexibility to launch services faster to the market, provide new and compelling promotions and pricing models, and combine services in order to drive ...
Upcoming Live Events!!
September 16, 2014, Santa Clara, CA
September 16, 2014, Santa Clara, CA
October 29, 2014, New York City
November 11, 2014, Atlanta, GA
December 9-10, 2014, Reykjavik, Iceland
Infographics
Allot's latest MobileTrends Charging Report shows that value-based pricing plans are up from 35% in 2011 to 85% in 2014.
Today's Cartoon
Vacation Special Caption Competition Click Here
Hot Topics
Microsoft to Axe 12,500 Ex-Nokia Employees
Sarah Reedy, Senior Editor, 7/17/2014
GM: 10 Car Models on Road With AT&T's LTE
Dan Jones, Mobile Editor, 7/18/2014
Have IBM & Apple Partnered Their Way to Cloud Leadership?
Mitch Wagner, West Coast Bureau Chief, Light Reading, 7/18/2014
The Municipal Menace?
Jason Meyers, Senior Editor, Utility Communications/IoT, 7/22/2014
FiOS: Slower Sub Growth, Faster Upload Speeds
Alan Breznick, Cable/Video Practice Leader, 7/22/2014
Like Us on Facebook
Twitter Feed