Alcatel-Lucent CEO says profit warning does not undermine merger logic UPDATE

Alcatel-Lucent CEO says profit warning does not undermine merger logic UPDATE

	Published : Thu, 13 Sep 2007 16:53 By : Agencies Print this Story

(Adds comments on US economy, further restructuring)

PARIS (Thomson Financial) - The merger between Alcatel and Lucent continues to make sense despite Alcatel-Lucent issuing today its second profit warning of the year, CEO Patricia Russo said.

In an interview with Agence France-Presse, Russo said that the rationale behind the merger was and remains being a sector leader in terms of scale, product portfolio and geographical reach.

But she acknowledged that Alcatel-Lucent is having a difficult year and that success is not easy in the sector.

Regarding today's profit warning, Russo said it related to investment levels among US mobile phone customers and not a change in Alcatel-Lucent's market share.

The company announced this morning that, following talks with North American wireless clients regarding their spending plans, third quarter sales growth is expected to be weak and will 'negatively impact' profitability in the period.

The company cited a 'change in capital spending' among these customers and as a result, the company is 'not seeing the projected volume changes that would have mitigated the ongoing pricing pressures it is experiencing'.

Patricia Russo told Agence France-Presse that Alcatel-Lucent had also observed a slowing in the mobile market linked to wider economic problems in the US.

The CEO said there was no link between today's results warning and last week's agreement with trade unions over job cuts planned under the integration programme.

Regarding Alcatel-Lucent's comment in today's statement that it will accelerate its current restructuring and implement additional cost savings, Russo cited property sales as an area in which the company could speed up its existing restructuring.

In terms of new savings initiatives, she cited a management reorganisation last month that brought together logistics and purchasing departments.

In terms of further job cuts, she said they are among the possible options but that Alcatel-Lucent would first implement its existing redundancy plans.

tfn.paris@thomson.com

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