Alcatel-Lucent's Q1 2007 revenues were down 8% year over year at constant EUR/USD exchange rate at EUR 3.882 billion. The reported gross profit was Euro 1,127 million and reported operating loss was EUR (582) million, including the impact from purchase price allocation entries of EUR (338) million. For the quarter, reported net income (group share) was EUR (8) million or EUR 0.00 per diluted share (USD (0.01) per ADS).
Alcatel-Lucent cited lower sales volumes in wireless and core networks, but noted good momentum building in its order flow resulting in an improving order backlog with a book-to-bill at 1.3x.
Some highlights for the quarter:
- Revenue for the carrier business segment was EUR 2,839 million compared to EUR 3,340 million in the year-ago quarter, a 10% decline at a constant EUR/USD exchange rate, or a 15% decline at current rate. Adjusted operating income (loss) was EUR (194) million, a (6.8)% operating margin.
- Revenue for the carrier wireline business group was EUR 1,287 million compared to EUR 1,342 million in the year-ago quarter, a 1% increase at a constant EUR/USD exchange rate, or a 4% decline at current rate.
- In DSL, 7.3 million lines were delivered - with close to half of the volume from the IP-based ISAM platform.
- Revenue for the carrier wireless business group was EUR 1,204 million compared to EUR 1,495 million in the year-ago quarter, a 15% decline at a constant EUR/USD exchange rate, or a 20% decline at current rate.
- Revenue for the convergence business group was EUR 348 million compared to EUR 503 million in the year-ago quarter, a 28% decline at a constant EUR/USD exchange rate, or a 31% decline at current rate. Legacy core revenue, in both wireline and wireless, continued to decline in line with the market rate. The company said the next generation core business is still not nearly big enough to offset the declines in legacy core networking but progress is expected.
- Revenue for the enterprise business segment was EUR 371 million compared to EUR 342 million in the year-ago quarter, a 12% increase at a constant EUR/USD exchange rate, or a 9% increase at current rate. The company said revenues showed strength across all parts of the business, with a strong performance in Europe and Asia. The voice and data business contributed to the segment's growth with good momentum in IP telephony migration for small and medium businesses.
- Revenue for the services business segment was EUR 626 million compared to EUR 674 million in the year-ago quarter, a 3% decline at a constant EUR/USD exchange rate, or a 7% decline at current rate. Adjusted operating income (loss) was EUR (29) million, a (4.6)% operating margin.
Patricia Russo, CEO commented: "Having completed the largest merger in our industry, we are encouraged by the progress we are making with our overall integration plans. Since December 1, 2006, we have finalized the product and technology roadmaps for the combined company and are communicating these decisions to our customers, helping reduce any uncertainty regarding product plans. Additionally, during the first quarter we took costs out of the business in areas such as procurement, information systems and R&D, and have achieved a net headcount reduction of approximately 1,900 positions, before the impact of recently announced managed services contract wins. Based on this progress, we are on track to achieve our planned pre-tax savings of at least EUR 600 million this year, in line with our target of EUR 1.7 billion pre-tax savings within 3 years. We will strategically reinvest part of these savings in markets and technologies which we believe will enhance our position going forward."http://www.alcatel-lucent.com
