AlcaLu Posts Q3 Profit

Alcatel-Lucent (NYSE: ALU) continued its recovery in the third quarter of 2010, with revenues of €4.07 billion (US$5.79 billion), up 10.5 percent year-on-year and up 6.8 percent compared with the second quarter. The company also reported a welcome net profit of €25 million ($35.6 million), though its operating income, at €61 million ($86.7 million), was lower than expected. (See AlcaLu Posts Q3.)

The vendor also noted that it expects to report a "significant sequential increase" in fourth-quarter revenues that, coupled with tight cost controls, should result in much improved operating profits.

Why it matters
Signs of recovery at AlcaLu, which reported improved performance at all three divisions (Networks, Applications, and Services) spells good news for the rest of the vendor community, as it signals a growing willingness on the part of operators to spend on new technologies.

But it still has some work to do to improve its operating profitability. In a "first take" research note Thursday morning, Soleil Securities Group Inc. analyst Mike Genovese described AlcaLu's third-quarter results as "positive but mixed." Genovese noted that the company's gross margin (33.8 percent) was lower than expected because of fewer software upgrades and strong revenue growth in China and India, where margins tend to be lower than average. This, in turn, led to the lower-than expected operating profits. For more
For more on AlcaLu's ongoing recovery, and to check out some of the interesting new business the company has won lately, see these stories:

— Ray Le Maistre, International Managing Editor, Light Reading

spc_markl 12/5/2012 | 4:19:37 PM
re: AlcaLu Posts Q3 Profit

We believe Alcatel-Lucent will become just Alcatel in the short term.

Mark Lutkowitz, Telecom Pragmatics

DCITDave 12/5/2012 | 4:19:37 PM
re: AlcaLu Posts Q3 Profit

Add software? I wonder when/if the softer side of AlcaLu will become called out/more widely recognized in the quarters to come because that's clearly the most interesting part of the company.

spc_markl 12/5/2012 | 4:19:36 PM
re: AlcaLu Posts Q3 Profit

The higher margins are going to be in software as well.


optiwizard 12/5/2012 | 4:19:29 PM
re: AlcaLu Posts Q3 Profit

It is amazing that some people are happy these days with just increasing the business figures. This merger is a disaster, it is still burning cash and there is absolutely no reason to believe that this company will generate any serious cash flow in the next 5 years. Why are investors still putting money in such companies, there are many other and better alternatives. Just sell all the shares and these fools will stop to develop things that nobody needs.

Bladeindark 12/5/2012 | 4:19:27 PM
re: AlcaLu Posts Q3 Profit

Huh, a prolocutor  of Huawei? Why do you detest ALU so much?

spc_markl 12/5/2012 | 4:19:26 PM
re: AlcaLu Posts Q3 Profit

There is plenty of evidence to be critical of Alcatel-Lucent without accusing a person for being a promoter of Huawei.  How about some large wireline service providers always waiting for the other shoe to drop in terms of the supplier's execution/performance?


optiwizard 12/5/2012 | 4:19:25 PM
re: AlcaLu Posts Q3 Profit

I don't detest ALU at all. I see the same problems in the other big Joint Venture between two former telecom vendors : Nokia Siemens Networks. History has proven that such alliances/JVs never create any shareholder value. My message is only that it is amazing that there are still investors to see any return on investment, even in the long term. Those JV's and mergers are going the same path as GM in the automobile industry. They all became too slow and too big to react on market trends. Put your money in other companies that create shareholder value, that is my message.

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