Alcatel-Lucent Cites Short-term Uncertainty and Trims Outlook

Citing short-term market uncertainty from major customers, delays attributed to its merger, and heightened competition in the global wireless market, Alcatel-Lucent trimmed its financial expectations for Q4 2006 and its outlook for 2007.



On an adjusted pro-forma basis, Alcatel-Lucent expects fourth quarter 2006 revenue to be approximately EUR 4.42 billion, compared with revenue of EUR 5.25 billion in the 2005 fourth quarter. Fourth quarter 2006 operating profit(2) is expected to be approximately at breakeven, compared with EUR 0.57 billion profit for the 2005 fourth quarter.



On an adjusted pro-forma basis, Alcatel-Lucent expects full year 2006 revenue to be approximately EUR 18.3 billion, compared with EUR 18.6 billion revenue for full year 2005. Full year 2006 operating profit is expected to be approximately EUR 1.04 billion, compared with EUR 1.41 billion in full year 2005.



"2006 was an extraordinary year in many ways for our company," said Patricia Russo, Chief Executive Officer of Alcatel-Lucent. "We completed the first and largest merger to date in our industry, we enhanced our wireless portfolio through the acquisition of Nortel's UMTS radio business and we completed a substantial part of the transfer of some of our operations to Thales.



In the past few months, these moves created short-term uncertainty for our customers and for our people as we worked to develop the combined company's product portfolio and new organization structure. This uncertainty together with the work required to close the merger significantly impacted the business.



In addition, the last quarter of the year proved to be challenging from a market perspective, driven by a shift in spending from some of our large North American customers and heightened competition in the global wireless market. Overall, the 2006 adjusted pro-forma financial results of the combined company were impacted by the weak performance in the fourth quarter resulting in cumulative revenues for full year 2006 at a similar level to full year 2005 revenues."http://www.alcatel-lucent.com