Alcatel-Lucent: Fiber's on Fire!
Talking about the performance of his company's wireline business unit during Thursday's earnings conference call, the Alcatel-Lucent (NYSE: ALU) CEO dryly remarked that when his CFO, Paul Tufano, stated that "fiber's on fire!" he told the CFO that "this was not physically possible."
The point of the anecdote, of course, was to note how fiber access broadband products are selling in greater volumes these days. Verwaayen noted that only a few quarters ago, copper-based broadband products accounted for almost 80 percent of the wireline unit's revenues and fiber-based products about 20 percent, but now it's about 50/50.
The increased demand for fiber access capabilities has been coming mainly from Asia/Pacific and the Americas, though there has been some action in Europe too. (See P&T Luxembourg Goes Ultra-Fast With AlcaLu, Telmex Does VDSL2, GPON With AlcaLu and China Unicom Expands GPON With AlcaLu.)
So might Europe be a hotbed of FTTH potential for AlcaLu in the coming years, given the European Commission's target that every European Union citizen should have access to broadband of at least 30 Mbit/s by 2020? (See Steely Neelie's FTTX Face Off, Europe's Broadband Challenge, Public-Private Partnerships Ensure Fiber Future in Europe and EC Proposes €9B for Broadband.)
Verwaayen has his doubts. "There aren't many people around that believe the EC's 2020 targets will be met," he noted. "There are initiatives, but ... there will be different scenarios with different plans and with different ownership," stated the CEO, And then, of course, there are other vendors keen to snap up any FTTX platform action that's going, including Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. and a new wave of North American hopefuls, including Adtran Inc. (Nasdaq: ADTN) and Calix Inc. (NYSE: CALX) (See Calix Goes Global and Adtran Wants NSN's International Pull.)
What's not on fire these days, of course, is AlcaLu's financial performance, with gross margins for the first quarter slumping to 30.3 percent. "That's the margin trough... It will improve in the second quarter and into the second half [of 2012]," stated Verwaayen. (See Bad Start to 2012 for AlcaLu.)
— Ray Le Maistre, International Managing Editor, Light Reading