Alcatel-Lucent's Q2 Hit by Delayed Carrier Spending

Citing delayed carrier spending and deteriorating macroeconomic environment, Alcatel-Lucent reported disappointing financial results for Q2 2012 as the company generated revenues of Euro 3,545 million, up 10.6% quarter-over-quarter and down 7.1% year-over-year on a reported basis. Gross margin came in at 31.7% of revenue for the quarter, compared to 34.9% in the year ago quarter and 30.3% in the first quarter 2012. There was a net loss of Euro (254) million or Euro (0.11) per share. This includes a Euro (176) million financial charge pre-tax, or Euro (108) million after tax.


Alcatel-Lucent announced 5,000 job cuts as part of an accelerated restructuring program.


"The second quarter performance confirms our strong positions in many attractive market segments including IP, Next-Generation Optics and Broadband Access, all of which are key investment areas that support our High Leverage Network Strategy," stated Ben Verwaayen, CEO Alcatel-Lucent.


"However, despite having demonstrated our ability to deliver operational profitability, it is clear from the deteriorating macro environment and the competitive pricing environment in certain regions challenging profitability that we must embark on a more aggressive transformation. We are therefore launching today The Performance Program to accelerate our transformation and reduce costs by Euro 1.25 billion by the end of next year in order to keep ahead of market realities. These times demand firm actions."


Some notes:

The growth rate in the IP business was more than offset by the double digit declines in both Wireless, resulting from a higher comparison base and moderate or delayed spending from service providers, and Optics.

Wireline posted a strong sequential increase and is further reducing the pace of its year-over-year decline rates, highlighting continuous increased demand in fiber access.

Software, Services & Solutions (S3) segment was declining at a high single digit rate, with Services business being almost flat.

Revenues for the IP division were Euro 473 million, a 16.5% increase from the year-ago quarter. Growth continued in the Americas and Asia Pacific regions and was joined this quarter by growth in the EMEA region as well. Revenues for the Optics division were Euro 542 million, a decrease of 16.0% from the year-ago quarter. The terrestrial optics business witnessed a high-single digit rate of decline, thanks to resilience in next-gen products which partially offset the secular decline of legacy optics.

Revenues for the Wireless division were Euro 877 million, a decrease of 18.7% from the year-ago quarter. Moderate or delayed spending of service providers drove declines in 2G and 3G technologies. Sequentially, CDMA stabilized in the US, and witnessed some good growth in China from network expansions. The LTE business more than tripled compared to the year-ago quarter. http://www.alcatel-lucent.com