Alcatel Profits, Forecasts Drop
Even though Alcatel took down its growth expectations for the next quarter, the company did attempt a guess at where its business would be. That, along with Alcatel's gains in the European market today, helped inch Alcatel's stock up 0.90 (3%) to 30.40 around midday.
For the quarter, Alcatel said its net profits were 210 million euros (US$189.12 million), or 18 cents (European) a share. That's a nearly 19 percent drop from Alcatel's year-ago quarter, which had earnings of 258 million euros (US$232.34 million), or 26 cents a share. (Alcatel figured its first-quarter 2001 earnings per share based on 1.17 billion shares versus 985 million shares as of a year ago).
Alcatel CEO Serge Tchuruk said he was pleased that sales to service providers from the firm's carrier networking and optics units grew some 40 percent year-over-year. But he said that U.S. sales of Alcatel's Litespan carrier access boxes had dropped off toward the end of March.
Though its telecom sales were up 24 percent in Q1, Alcatel said its total telecom sales growth, which includes its e-Business unit, will be in the single digits for the quarter.
"Providing full year guidance given current lack of visibility is a hazardous undertaking," Tchuruk said in a prepared statement. "At this point in time, our best effort forecast for the year is that sales growth will be positive and come in between 5% and 15%. Income from operations should grow at a faster rate."
Alcatel had previously forecast telecom sales growth of 20% to 25%, with operating profit expansion of twice that, according to the analysts at Commerzbank in London. Still, analysts overall were confident that Alcatel's efforts to cut costs will offset the firm's near-term slowdown.
Those cost-cutting measures include outsourcing telephone handset production in Europe to Flextronics International (Nasdaq: FLEX), along with transferring 830 employees to the contract manufacturer. This and other measures should cut Alcatel's costs by about one billion euros (about US$900 million).
-- Phil Harvey, Senior Editor, Light Reading http://www.lightreading.com