Light Reading

Alcatel-Lucent's Q4 Inheritance

Ray Le Maistre

Alcatel-Lucent reported its fourth-quarter and full-year 2012 financials early Thursday, but the numbers were always going to be overshadowed by the confirmation that Ben Verwaayen has relinquished his role as CEO and will hand it over to a successor in the coming months. (See Verwaayen Quits as Alcatel-Lucent CEO and AlcaLu Reports Q4 Loss of €1.37B.) Verwaayen will leave just as the storm clouds part slightly for the vendor, which looked in dire trouble only six months ago. Its financial situation has stabilized in recent months, aided by the access to fresh capital that followed the announcement of a corporate reorganization, setting up 2013 as a year in which AlcaLu might redeem itself and retain Tier 1 vendor status. (See Euronews: AlcaLu Gains on Credit Boost and Alcatel-Lucent Sharpens Its Focus.) So, what will the new CEO be inheriting? The fourth quarter provided a few reasons for optimism for the company, although, as usual, the main positives came from the IP division, which reported record quarterly sales of €574 million (US$770 million). It's probably not an exaggeration to suggest that without the IP unit, AlcaLu would have sunk by now. Total fourth-quarter revenues reached almost €4.1 billion ($5.5 billion), up 13.8 sequentially but down 1.3 percent from a year ago, while operating income (before one-time costs) was €66 million ($88.5 million, better than expected), about two thirds down on a year ago but much improved compared with the €181 million ($243 million) operating loss recorded in the third quarter. Gross margin was 30.4 percent, better than the 27.9 percent recorded in the third quarter but down from 34.4 percent a year ago. By comparison, Ericsson AB and Nokia Siemens Networks reported gross margin levels of 31.1 percent and 36 percent respectively in the fourth quarter. The fourth-quarter net loss, which includes restructuring, asset impairment and other one-time charges, was €1.37 billion ($1.84 billion). On the face of it there seems little here to stoke any optimism: Fourth-quarter financials are historically better than the third quarter's, so sequential improvements are to be expected. But there were some rays of hope. In addition to the stellar performance of the IP division, the important wireless unit (which includes 4G infrastructure) also reported improved sales on a sequential and year-on-year basis, while the same feat was achieved by the Software, Services & Solutions division, which generated revenues of €1.39 billion ($1.86 billion). That total included €240 million ($322 million) from the Network Applications business, up nearly 53 percent year-on-year thanks for subscriber data management and IMS-based 4G voice systems deployments at LTE operators in North America (though that suggests it is more of a one-off bump rather than the start of a trend). Encouragingly, revenues from North America hit €1.6 billion ($2.14 billion), making it the only region that showed growth (of 13.7 percent) compared with the fourth quarter of 2011. Verwaayen stated in the company's earnings report that AlcaLu is dealing quickly with its less profitable managed services contracts, reducing its costs quicker than expected, and is seeing "growth in both our order book and backlog." But the big question is, who will replace Verwaayen and will they be able to capitalize on the current strands of hope? Investors clearly have concerns that a handover might not help the company's chances of a full recovery as AlcaLu's share price is down more than 4 percent at $1.64. — Ray Le Maistre, International Managing Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Beer
2/21/2013 | 5:25:52 AM
re: Alcatel-Lucent's Q4 Inheritance
TiMetra Networks. The best 150M that ALU ever spent! Possibly the best acquisition in telecom history.
From The Founder
The comms industry is rallying to the cause of open, independent interoperability testing.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Interviews
AT&T's Chiosi on the Potential of Open Source

10|6|15   |   06:27   |   (0) comments

AT&T Distinguished Network Architect Margaret T. Chiosi talks to Light Reading's Carol Wilson about the potential for open source technology to liberate communications service providers.
LRTV Interviews
Network Security in a Gigabit World

10|6|15   |   05:52   |   (0) comments

Masergy's James Harrison talks about some of the network security and data center issues network operators need to consider as they expand their broadband services portfolios.
LRTV Documentaries
Telefónica: In Search of Virtual Simplicity

10|5|15   |   07:30   |   (0) comments

Francisco-Javier Ramon Salguero, head of Telefónica's NFV initiative, admits virtualization initially means greater complexity, but with the right abstraction layer, it is possible to create a services-driven network architecture. He explains how Telefónica's current trials and initiatives are aimed at doing that, and what his company and other carriers need to ...
LRTV Interviews
Gigabit Europe Takeaways

10|5|15   |   03:47   |   (0) comments

Participants from the inaugural Gigabit Europe event in Munich share their key takeaways from the conference.
Women in Comms Introduction Videos
Intel Urges Women to Take Advantage of Their Seat at the Table

10|5|15   |   4:27   |   (1) comment

Have inclusive and constructive conversations, attach a bigger meaning to your work and get involved in the cause, Intel's Monique Hayward advises women in comms.
LRTV Interviews
BT Updates on Plans

10|2|15   |   03:16   |   (2) comments

Peter Bell, CIO at Openreach, the access network division at UK incumbent BT, provides an update on the operator's trials and how Openreach is planning to deploy the broadband technology in its street cabinets.
Telecom Innovators Video Showcase
Sonus Shakes Up SD-WAN

10|2|15   |   7:22   |   (0) comments

Sonus CTO Kevin Riley sat down with Light Reading to discuss the trajectory of the company, its SDN ambitions and why Sonus is taking a market-disruptive approve to SD-WAN.
LRTV Interviews
CityFibre's Gigabit Vision

10|1|15   |   03:18   |   (1) comment

Mark Collins, director of Strategy & Public Affairs at competitive UK city network operator CityFibre, talks about his company's plans to help build Gigabit Cities.
Telecom Innovators Video Showcase
Automate, Scale & Create With Juniper's vCPE Solution

10|1|15   |   6:34   |   (0) comments

Join Kireeti Kompella, Juniper Networks CTO, and Steve Saunders, Light Reading Founder and CEO, as they discuss Juniper Networks' approach to NFV showcased with a turnkey vCPE solution, which demonstrates how service providers can use automation to rapidly deploy services.
LRTV Interviews
Gigabit Europe: Day 1 Takeaways

9|29|15   |   05:47   |   (5) comments

Light Reading's Ray Le Maistre and Iain Morris sup a beer and discuss some of the key takeaways from the first day of Gigabit Europe 2015.
LRTV Interviews
Gigabit in Europe

9|29|15   |   04:24   |   (0) comments

At the Gigabit Europe 2015 event in Munich, Heavy Reading's Graham Finnie talks about the availability of gigabit broadband in Europe.
Women in Comms Introduction Videos
AT&T's Band of Women

9|28|15   |   4:36   |   (0) comments

Brooks McCorcle, the president of AT&T's partner solutions divisions and a mathematician by trade, shares stats on AT&T's diversity and advice on how to create your own band of women at work.
Upcoming Live Events
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Communication service providers realize that an ICT transformation is critical to their long-term survival, but most haven't yet committed to making it happen.
Hot Topics
Verizon's Go90 Is Live – Will Anyone Watch?
Mari Silbey, Senior Editor, Cable/Video, 10/1/2015
Eurobites: Dunroamin'
Paul Rainford, Assistant Editor, Europe, 10/2/2015
McKinsey: Women Less Likely to Advance at Work
Sarah Thomas, Editorial Operations Director, 10/1/2015
Sprint to Cut Up to $2.5B in 6 Months
Sarah Thomas, Editorial Operations Director, 10/2/2015
TiVo Takes Aim With Bolt
Mari Silbey, Senior Editor, Cable/Video, 9/30/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With so many new and exciting communications technologies now under development, it's easy to get caught up in the industry's escalating hype cycle. That's why the ...
Last week saw a big day in the 15-year history of Light Reading when Editor-in-Chief Ray Le Maistre and I were invited to interview the Deputy Chairman and Rotating ...
Cats with Phones
Hold My Calls, Indefinitely Click Here