Alcatel reported Q3 sales of EUR 3.044 billion, up 11% (14% at constant exchange rates) over the same period last year and up 3% sequentially. The company's gross margin was 37.7% of sales. Net income pre-goodwill for the quarter was registered at EUR 187 million or diluted EUR 0.14 per share (USD 0.17 per ADS) and net income after goodwill at EUR 84 million or diluted EUR 0.06 per share (USD 0.08 per ADS). Some highlights for Q3.
- Mobile communications: sales were up 28% YoY with positive indications for Q4. Alcatel cited sales breakthroughs in India and Brazil and expansions in Russia, Africa, the Middle East and China. Alcatel is now investing in a disruptive NGN cellular core technology through its association and planned acquisition of Spatial Wireless.
- Fixed communications: revenue decreased by 3.8% to EUR 1,253 million from EUR 1,302 million in Q3 2003, continuing on a flattish trend. Both the Data and Fixed Solutions businesses turned in significant growth. The IP edge service routing activity now boasts more than 40 customers across diverse geographical regions, with over 10 new accounts added during the quarter. MSWAN sales continued to be strong as a result of increased traffic in access, most notably in Europe. The growth in fixed solutions was driven by triple play services, in particular, the early adoption in Western Europe, Latin America and Russia, while NGN continued to gain momentum, exemplified by wins in China during the quarter wherein Alcatel will deliver one million NGN lines to three different Chinese carriers. Optical networks also grew during the quarter benefiting from the demand in the metro domain as well as for cross connects by the wireless carriers as they build out their network. Compared to a year ago, shipments of ADSL lines grew strongly in China, moderately in Europe, and declined in North America, which overall resulted in a softness in revenues. Alcatel delivered 4.5 million lines in the quarter, bringing cumulative deliveries for the year to 14.8 million. Voice networks continued to decline, even if, emerging countries in the deployment phase showed some strength. During the quarter an agreement was reached to dispose of the power systems business. The company said its investments in triple play technologies, as evidenced by the recent win with SBC for Project Lightspeed.
- Private communications: revenue increased by 11.4% to EUR 935 million compared with EUR 839 million in Q3 2003. Alcatel noted growth in its IP/PBX business particularly in Europe and, to a lesser extent, in Asia. Genesys continued to post solid results, particularly with large US companies as well as in Asia Pacific.
