Alcatel Offers Options, Outlook

PARIS -- Alcatel's (NYSE: ALA and Paris: CGEP.PA) Board of Directors met Wednesday, March 7, 2001, and approved a stock-option program covering more than 30,000 employees worldwide. This plan will allow Alcatel to foster loyalty amongst its existing employees and add to its talent base through new hires. The plan's strike price was established at 50 Euros per option granted. Also during the meeting, Chairman Serge Tchuruk presented to the Board the group's prospects for the first quarter of 2001 and the outlook for the full year.

First quarter sales are displaying strong growth in carrier-based activities, both in networking and optics. Mobile handset sales, on the other hand, which represent only 7% of total group revenue, are displaying a year-on-year deterioration due to excess inventory in distribution channels at the beginning of the year as well as a general market slowdown. Overall, consolidated revenue growth for the first quarter should be close to previously announced forecasts. Despite losses in mobile handsets, consolidated operating income for the first quarter should remain in line with levels from the same quarter one year ago due to clear improvement in carrier networking and optics segments.

Full year sales, excluding the mobile handset business, should remain in line with previously announced forecasts. A cost cutting program affecting both supply chain and operating expenses is being implemented so that consolidated operating income will not be impacted by the deterioration of the mobile handset business.

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