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AlcaLu Ends 2008 With €5.2B Loss

Alcatel-Lucent (NYSE: ALU) ended a tumultuous 2008 by reporting a net loss of €3.89 billion (US$5.04 billion) for the fourth quarter, a number that masked some signs of improving operational performance. (See AlcaLu Reports Q4.)

Added to the losses incurred in the year's previous three quarters, AlcaLu's full year net loss totaled just over €5.2 billion ($6.73 billion).

Fourth quarter 2008 financials
The headline fourth-quarter net loss figure was the result of a €3.91 billion ($5.06 billion) impairment charge that was the result of a "thorough re-assessment of the carrying value of goodwill and other intangible assets on its balance sheet." Without the one-time, non-cash charge, Alcatel-Lucent would have broken even in the final three months of the year.

In the company's press release, issued early Wednesday morning, AlcaLu CEO Ben Verwaayen noted: "The asset impairment charge that severely impacted our bottom line was made necessary by the drastic deterioration of the global economic outlook during the fourth quarter as well our decision to shift to a more focused portfolio." (See Verwaayen Unveils AlcaLu's New Plan .)

The vendor reported revenues of €4.95 billion ($6.41 billion), down 5.4 percent from the fourth quarter of 2007, though its adjusted operating income (excluding non-cash charges related to the 2006 Lucent merger) of €297 million ($385 million) was down only 2 percent year-on-year. Fourth-quarter adjusted gross margin was 33.3 percent, 0.9 percent better than a year earlier.

AlcaLu's share price increased 3.9 percent Wednesday morning to €1.52 on the Paris exchange.

Full year 2008 financials
For the full year, Alcatel-Lucent reported revenues of almost €17 billion ($22 billion), down 4.5 percent from 2007's €17.8 billion ($23.1 billion). The company noted that without the impact of shifting currency exchange rates its full year revenues would have been down by 1.1 percent.

Full year adjusted operating income was €466 million ($604 million), more than four times better than 2007's equivalent, while the adjusted gross margin was 34.1 percent, 0.6 percent better than in 2007.

But as a result of the impairment charges recorded during the second and fourth quarters, plus full year restructuring costs of more than €560 million ($725 million), AlcaLu's full year net loss totaled just over €5.2 billion. (See AlcaLu's Q2 Dragged Down by CDMA.)

Of Europe's three major telecom infrastructure giants, Ericsson AB (Nasdaq: ERIC) can boast the best 2008 results. The Swedish firm recently reported full year revenues of 208.9 billion Swedish kronor ($25.2 billion), up 11 percent compared with 2007, and net income of SEK11.3 billion ($1.36 billion), down 48 percent from 2007. (See Ericsson Soars on Strong Q4, Outlook.)

Nokia Networks reported full year revenues of €15.3 billion ($19.8 billion) and an operating loss, including one-time charges, of €301 million ($390 million). Excluding those one-time charges, NSN managed an operating profit in 2008 of €757 million ($980 million). (See Nokia Siemens Dips in Q4.)

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Sisyphus 12/5/2012 | 4:12:33 PM
re: AlcaLu Ends 2008 With €5.2B Loss ...so it increasingly looks as if the vendors that have stayed overly anchored in teir traditional telco box supplier niche (Nortel, AlcaLu) face up to very limited growth potential at best. The guys/gals that have crawled up the stack more aggressively (Ericsson with mobility, Cisco with application stack ambitions) face more promising prospects. Let's hope. CSCO to announce in a few hours, probably setting the mood for 2009 in our industry...
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