ALU Posts Strong Q1 Driven by Wireless in North America

Alcatel-Lucent posted strong results for Q1 2011 with revenue Euro 3.740 billion, up 15.2% year-over-year and down 23.1% sequentially. Adjusted gross profit came in at Euro 1.354 billion or 36.2% of revenues.



"We have started this year the way we ended the last, increasing growth, profit and global strength, and to do so in the first quarter is particularly pleasing. A favourable geographic and product mix impacted positively our gross margin while actions on fixed costs have been taken which will drive further efficiency gains during the course of the year. We improved our free cash flow by more than Euro 200 million compared to the year ago quarter," stated Ben Verwaayen, CEO.



Some highlights:



NETWORKS



Revenues were Euro 2.418billion, an increase of 25.4% compared to Euro 1.928 billion in the year-ago quarter and a decrease of 18.1% compared to Euro 2.952 billion in the fourth quarter 2010.



Strong revenue growth continued in the IP division in the first quarter with an increase of 28.3% from the year-ago quarter to Euro 349 million. Within the division growth was, once again, driven by the IP/MPLS service router business, where revenues increased 40% from the year-ago quarter and nearly doubled their year-ago level in the Americas region.



As of the first quarter, 14 service providers have now deployed Alcatel-Lucent's IP Service Routers with 100 Gigabit Ethernet.



Revenues for the Optics division were Euro 654 million, an increase of 15.3% from the year-ago quarter as the second consecutive quarter of 20% year-over-year growth in the terrestrial business was joined by an increase in the submarine business – its first since year-over-year growth in our sub-sea business turned negative in early 2010. Growth was widespread across the terrestrial business and although it was once again led by the WDM segment, where revenues increased 40%, it also included double-digit gains in metro aggregation and optical switching and near double-digit growth in wireless (microwave) transmission.



Single-carrier 100G coherent WDM optical transport technology continued to have strong momentum with wins, ongoing deployments and field trials with operators worldwide, including Kazakhtelecom for a total of 30+ customer references around the world.



In the submarine business, we were awarded six new contracts.



Growth in the Wireless division remained very strong as revenues increased 36.5% from the year-ago quarter to Euro 1.118 billion. Growth was concentrated in the Americas and was driven largely by the CDMA EV-DO business, which more than doubled its year-ago level, and by the 4G LTE business.



Growth continued in the Wireline division for the second consecutive quarter, with revenues increasing 3.7% from the year-ago quarter to Euro 309 million.



Sales of our next-generation Networks products increased 19% from the year-ago quarter and reached Euro 901 million in the first quarter. This accounts for 37% of Networks sales.



APPLICATIONS



For the first quarter 2011, revenues for the Applications segment were Euro 451million, an increase of 8.4% compared to Euro 416 million in the year-ago quarter and a decrease of 21.6% compared to Euro 575 million in the fourth quarter 2010.

Network applications revenues of Euro 166 million increased 11.4% from the year-ago quarter in the first quarter, marking a fourth consecutive quarter of year-over-year growth. The increase was led by strong growth in Payment, Digital Media & Advertising, Applications Professional Services (software customization) and our Motive solution (remote customer management).

Revenues in the Enterprise applications business increased 5.2% over the year-ago quarter, reaching Euro 285 million in the first quarter. Genesys enjoyed a double-digit growth, led by new customer wins in APAC and in the Americas and the strong growth of its offerings in adjacent markets such as Intelligent Workload Distribution (iWD), Work Force Optimization (WFO) and Analytics. Data networks grew at a high single digit-growth rate with sales of the Omniswitch 10k, the company's new high capacity switch, off to a great start to the year. Finally, the voice telephony business grew at a low single digit rate.



SERVICES



For the first quarter 2011, revenues for the Services segment were Euro 809 million, an increase of 4.8% compared to Euro 772 million in the year-ago quarter and a decline of 29.0% compared to Euro 1.140 billion in the fourth quarter 2010. At constant currency exchange rates, Services revenues increased 2.6% year-over-year and declined 28.6% sequentially.



Revenues in Managed and Outsourcing Solutions business increased at a single-digit rate in the first quarter, with growth across all regions. During the quarter, we signed a number of contracts for new roll-outs and project extensions in the EMEA and Asia-Pacific regions.



In the Network and Systems Integration (NSI) business, revenues increased at a near 30% rate for the second consecutive quarter with continued strong growth in orders. Revenue growth was particularly strong in the Americas driven by network transformation projects, and in the Asia-Pacific region driven by strategic industries.http://www.alcatel-lucent.com