Alcatel-Lucent Reports Slow Start to 2012

Citing a slower than expected start to 2012 and economic uncertainties in Europe, Alcatel-Lucent reported Q1 2012 revenues of Euro 3,206 million, down 12.3% year-over-year on a reported basis and down 14.8% year-over-year at constant currency. There was an adjusted operating loss of Euro 221 million or -6.9% of revenue.


Networks saw a double digit year-over-year decline. The IP business continued growing at a double digit rate, but this was more than offset by the double digit decline in Optics and Wireless.


"Today’s results reflect a slow start to the year while demonstrating good control on both cash and costs and a strong momentum in our next generation products portfolio. But gross margin is not at the level we would have liked. Since the last quarter of 2011, we have been negatively impacted by lower volume and by an unfavourable revenue mix, particularly in Services. As 2012 continues to unfold we will maintain strict financial discipline and we will leverage a number of significant next generation network roll-outs around the globe, in particular in North America and China, as well as those expanding our position in countries such as Japan and in Latin America. This activity will be strengthened further by our innovation pipeline and major product introductions. However, market uncertainties remain high in Europe and the transition from CDMA to LTE is accelerating in North America," stated Ben Verwaayen, CEO Alcatel-Lucent.


Some highlights from the quarterly report:


Networks

Revenues for the Networks segment were Euro 1,981 million, a decrease of 18.1% compared to Euro 2,418 million in the year-ago quarter and a decrease of 20.0% compared to Euro 2,476 million in the fourth quarter 2011.


Revenues for the IP division were Euro 431 million, a 23.5% increase from the year-ago quarter. The company cited strength in both the APAC and Americas regions, both growing more than 30% year-over-year.


Revenues for the Optics division were Euro 489 million,a decrease of 25.2% from the year-ago quarter, driven by double-digit declines in both terrestrial and submarine businesses.


Revenues for the Wireless division were Euro 788 million, a decrease of 29.5% from the year-ago quarter. GSM was extremely weak in China due to central bidding phasing, while CDMA stabilized from Q4 levels. These trends were partially offset by double-digit growth in W-CDMA and LTE revenues, which more than doubled compared to the year-ago quarter, and grew more than 50% sequentially.


Revenues in the Wireline division declined 8.7% from their year-ago level, to Euro 282 million. Declines in the legacy businesses were partially offset by strong growth in fiber access equipment. Fiber access grew in excess of 100%, mainly driven by GPON growth in the APAC and Americas regions.


Sales of next-generation Networks products increased 23% from the year-ago quarter, reaching Euro 1,106 million in the first quarter 2012.


Software, Services and Solutions


Revenues for the S3 segment were Euro 969 million, a decrease of 0.6% compared to Euro 975 million in the year-ago quarter and a decrease of 26.3% compared to Euro 1,315 million in the fourth quarter 2011.


Revenues for Services business were Euro 870 million, flat compared to the year-ago quarter. Growth continued in the Managed Services business, with revenues increasing at a double-digit rate with strength across all geographies, particularly CALA, Western Europe and India, compared to the year-ago quarter.


Network Applications revenues declined 6.6% from their year-ago level, to Euro 99 million in the first quarter. Excluding the resale activity that was terminated in the fourth quarter of 2011 from the year-ago quarter, sales in Network Applications would have been flat year-over-year.


ENTERPRISE

Enterprise business revenues were Euro 178 million, a decrease of 8.7% compared to Euro 195million in the year-ago quarter and a decrease of 17.2% compared to Euro 215 million in the fourth quarter 2011. The declines in voice telephony were driven by a difficult economic environment in Europe. The data networking business saw slight declines in the first quarter due to slowdowns in certain services, while revenues related to Ethernet port shipments grew at a double-digit rate, highlighting the success of our renewed portfolio including the OmniSwitch 10k and OmniSwitch 6900.
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