Alcatel Reports Q1 Results

Alcatel reports operating income of €80M compared with a loss of €150M in 1Q03; net income was €134M or €0.10 per share

April 30, 2004

3 Min Read

First quarter highlights:

  • Sales about stable year over year

  • Gross margin up at 36.6%

  • Income from operations at Euro 80 million at 2.9% of sales, up 8 points year over year

  • EPS (pre goodwill) positive at Euro 0.18, and Euro 0.10 after goodwill



PARIS -- Alcatel’s Board of Directors (Paris: CGEP.PA and NYSE: ALA) reviewedand approved first quarter 2004 results. Sales were registered at Euro 2,740 million compared withEuro 2,828 million in the first quarter 2003, down 3% at actual exchange rate and up 2% at aconstant rate. The gross margin improved to 36.6% compared to 30.3% in the first quarter lastyear. Income from operations amounted to Euro 80 million, with all business segments positive,compared with a loss of Euro (150) million in the same period last year. Net income (pre-goodwill)for the quarter was registered at Euro 234 million or diluted Euro 0.18 per share (USD 0.22 perADS) and net income after goodwill at Euro 134 million or diluted Euro 0.10 per share (USD 0.12per ADS).

Serge Tchuruk, Chairman and CEO summarized the Board’s observations:“Our performance in Q1 2004 is a clear confirmation that Alcatel is on the right track. With thesales decline stopping, our margins can now benefit from the intense restructuring which has beencarried out. We are pleased to see, in this traditionally weak quarter, positive operating incomegenerated in all segments and our earnings per share getting back in the black (even without thecapital gain of the SAFT divestment, the pre goodwill EPS is at breakeven).

Our key strategic choices have been validated by recent accomplishments. Partnerships are beingset up in areas where consolidation can generate future value while suppressing the burden on ouroperating income from formerly stand-alone operations. We are confident that our cooperationwith Draka, creating the number 2 world player in fiber optics, and with TCL, creating a major forcein cellular handsets, will change the world landscape in these markets. In parallel, our order intakereflects the pay off of our focus on next generation technologies which can differentiate Alcatel: theirgrowing traction is largely driving our positive revenue outlook for the rest of the year, in a marketwhich otherwise remains uncertain. Private Communications will continue to benefit from advancesin IP telephony, interaction management and our world leading technology in rail control andcommunication networks. The Evolium range of solutions for mobile equipment and applicationswill be further enhanced with unique features supporting a projected growth in sales for the full year.Finally, breakthroughs in IP service routing, next generation optical systems, multimedia wirelinesolutions for VoIP and triple play applications are set to sustain Fixed Communications revenues.”

Outlook

“At this point, we are upgrading our expectations of year over year revenue growth going forward,both for the coming quarters and for the full year 2004. For the second quarter, as well as for fullyear, we expect high single digit year over year sales growth at a constant Euro/Dollar rate, whichtranslates into significant growth at the current rate. EPS (pre-goodwill) should be positive for thesecond quarter and should become substantial for the full year.”

Alcatel SA

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