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Eurobites: AlcaLu Improves Margins, Cuts Losses in Q3

Paul Rainford
10/30/2014

Also in today's EMEA regional roundup: Deutsche Telekom pushes "European Internet"; Ericsson certifies NFV; BT's second-quarter revenues slip.

  • Alcatel-Lucent (NYSE: ALU)'s third-quarter revenues dipped by almost 6% year-on-year to €3.25 billion (US$4.08 billion) but its gross margin improved to 34% from 31.9%, reflecting the vendor's efforts to cut costs and improve profitability. The news gave the vendor's share price a significant boost on the Paris stock exchange, where its price shot up by more than 11% in morning trading to €2.27. Much of the decline in revenues is the result of AlcaLu's decision to exit many managed services contracts. The vendor is still losing money, but nowhere near as much as it was: Losses narrowed from €200 million ($251.6 million) in the year-ago quarter to €18 million ($22.6 million) this time round, and the company largely blamed restructuring costs for the deficit. In a research note, Jefferies analyst George Notter judged the results a "reasonable outcome from the company's 'Shift Plan' cost reduction efforts," and offered a rating of "Hold." In another AlcaLu news, its independent enterprise arm, Alcatel-Lucent Enterprise, has moved to a new headquarters just outside Paris, within which it has opened a new Executive Briefing Centre that will offer "experience days" comprising lab tours, live demos and meetings with AlcaLu's boffins. (See Alcatel-Lucent CEO: We Can Go It Alone, Alcatel-Lucent Builds Future Around IP and Alcatel-Lucent Unveils Shift Plan.)

  • A survey commissioned by Deutsche Telekom AG (NYSE: DT) has found that two-thirds of politicians and managers of large-to-midsized firms believe there is a pressing need to create European alternatives to the likes of Google and Facebook following revelations of data-snooping by the US National Security Agency. However, these same respondents acknowledge that it is unlikely this will happen. (See Eurobites: Germany Wants Answers on Network Snooping, Euronews: Merkel's Mad as Hell at NSA and Another Day, Another Domestic Spying Revelation.)

  • Ericsson AB (Nasdaq: ERIC) has launched a certification program for the Open Platform for Network Functions Virtualization (OPNFV), which it hopes will create an environment to help ensure that NFV solutions and infrastructures are compatible with emerging NFV standards and the open source OPNFV reference platform. (See Open NFV Group Uncloaks Its Platform Plan and Analysts Warn of Major NFV Gaps.)

  • BT Group plc (NYSE: BT; London: BTA)'s Consumer division was the only division showing revenue growth in the operator's fiscal second-quarter results, up 7% year-on-year to ₤1.05 billion ($1.67 billion). As Bloomberg points out, the offer of "free" BT Sport TV channels to new broadband customers didn't stop consumer broadband growth falling to its lowest level for two years as competitors weighed in with cheaper offers. Overall revenues were down 2% to ₤4.83 billion ($7.72 billion), though profits were up 13% to ₤563 million ($899 million), partly reflecting a decline in depreciation and amortization costs. (See Eurobites: Soccer Surge for BT's Fiscal Q4.)

  • Jazztel plc , the Spanish broadband provider that is currently the subject of a €3.4 billion ($4.2 billion) takeover bid from Orange (NYSE: FTE), posted a 19% increase in nine-month net profits to €58.4 million ($74.4 million), Reuters reports. The company also announced it was investing another €300 million in its FTTH program. (See Eurobites: Orange Agrees €3.4B Jazztel Buy.)

  • UK mobile joint venture EE has flicked the switch on its LTE-Advanced service in central London, using EE's 2.6GHz spectrum to offer peak downlink speeds of around 150 Mbit/s. EE hopes to have LTE-Advanced -- or 4G+ as it calls it -- right across Greater London by June 2015, to be followed by a rollout to other major British cities.

    — Paul Rainford, Assistant Editor, Europe, Light Reading

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