Telecommunications equipment maker Alcatel-Lucent (ALU) warned yesterday of its second profit slump in two consecutive quarters. In an unexpected announcement, the company said it would record an adjusted first-quarter operating loss of about $352 million, half of which is linked to "unusual significant" items. Alcatel-Lucent warned that it would report first-quarter revenue down 12 percent at current exchange rates to $5.28 billion.
The results (the second since French Alcatel acquired American Lucent in November) compare with an adjusted pro-forma operating income of $333 million in the first quarter of 2006.
"While parts of our businesses performed well, our first quarter results were impacted by lower volumes in traditional wireless and core networks at a time when considerable investments were made in the next generation of these technologies," CEO Patricia Russo said. She also said job cuts so far reached 1,900 during the quarter, representing 15 percent of the three-year target of 12,500.
Analysts expressed concern, and Alcatel-Lucent shares fell 2.4 percent to $12.32 Tuesday.
Dresdner Kleinwort analyst Per Lindberg called the first-quarter results an "atrocious development" for the newly combined company, further questioning the feasibility of the business. "It will be very difficult for them to grow by 5 percent for the year as they had hoped," said Lindberg. Jan Ihrfelt, an analyst at Swedbank in Stockholm, added that the problems affecting Alcatel-Lucent appeared to be more related to its integration than the health of the overall industry. (info from The Associated Press)