The Franco-American vendor added to its long list of disappointing financial reports today with first-quarter numbers that crunched its share price on the Paris stock exchange.
The company reported revenues of €3.25 billion (US$4.15 billion), down 9.8 percent compared with a year ago, and a net loss of €515 million ($658 million), 28 percent worse than last year. It did, though, improve its gross margin and report a reduced operating loss compared with the same period a year ago.
Table 1: Alcatel-Lucent Q1 2010
|In millions of euros||Q1 2009||Q1 2010||Change|
|Gross margin||31.5%||32.6%||1.1 percentage point|
|Earnings per share (in euros)||-0.18||-0.23||-27.8%|
Alcatel-Lucent is not alone in finding the early months of this year a struggle, as rivals Ericsson AB (Nasdaq: ERIC) and Nokia Networks also reported grim first-quarter numbers. (See Carrier Caution Cuffs Ericsson in Q1 and NSN Shrinks Again, But Q2 Looks Rosier.)
Alcatel-Lucent has another thing in common with Ericsson, as both companies said their first-quarter numbers were hit by supply chain problems. Ericsson said it had problems sourcing semiconductors from its suppliers, while AlcaLu stated it was unable to "fully satisfy customer demand for our products due to tightening components availability," with the vendor's mobile access and optical transport product lines particularly affected.
Table 2: Alcatel-Lucent Q1 2010 revenues by division
|Revenues in millions of euros||Q1 2009||Q1 2010||Change|
|- of which IP||288||272||-5.6%|
|- of which Optics||657||567||-13.7%|
|- of which Wireless||915||819||-10.5%|
|- of which Wireline||393||298||-24.2%|
|- of which eliminations||-34||-28||-17.6%|
|Other and eliminations||138||131||-5.1%|
AlcaLu suggests that, without those component constraints, it may have been able to paint a rosier picture of its progress so far in 2010. The shortages, stated the vendor's CEO Ben Verwaayen in the company's prepared statement, "resulted in a weak financial performance this quarter, which does not reflect the overall underlying momentum within the company."
The CEO noted: "We are witnessing a recovery in the telecommunications equipment and related services market in some geographical areas especially North America. This recovery is driven by key technologies such as IP, terrestrial optics and WCDMA/LTE. With a solid position in all of these areas, Alcatel-Lucent is experiencing a strong increase in demand."
As a result of these improving market conditions, AlcaLu is expecting to report improved sales for its second quarter.
Investors, though, saw only the weakness, as Alcatel-Lucent's share price dipped by more than 5.4 percent to €2.14 on the Paris bourse in morning trading, ahead of the vendor's lunchtime investor and analyst conference call.
— Ray Le Maistre, International Managing Editor, Light Reading