Alcatel-Lucent post Q2 net loss as sales beat forecasts; no guidance UPDATE

Alcatel-Lucent post Q2 net loss as sales beat forecasts; no guidance UPDATE

	Published : Tue, 31 Jul 2007 08:10 By : Agencies Print this Story

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PARIS (Thomson Financial) - Alcatel-Lucent swung to a net loss in the second quarter as the transition phase following its merger continued to weigh on the bottom line.

The telecoms equipment company reported adjusted second-quarter net losses of 336 mln eur, as against a profit of 302 mln eur in the second quarter of 2006.

The adjusted operating loss was 19 mln eur, compared with a profit of 252 mln.

The company gave no earnings guidance for the full year.

Analysts had signalled that second quarter earnings would be difficult to call due to the effects of the merger.

The profit lines were adjusted to exclude the amortisation of the purchase price of Lucent, among other items.

Sales were up 0.5 pct on the year-before period at 4.33 bln eur, ahead of consensus estimates compiled by Thomson Financial of 4.277 bln eur. The figure was adjusted to show a constant euro/dollar exchange rate; including the dollar's weak performance, sales were down 4 pct.

The year-before figures were for the pro-forma combined businesses of Alcatel and Lucent as of Jan 1, 2006.

Alcatel said its gross margin of 33.4 pct for the quarter was 'lower than we would have liked' and is 'not indicative of the business going forward'.

The margin, which was 34 pct in the first quarter of 2007 and 38 pct in the second quarter of last year, was impacted this time by key investments, transition costs and an unfavourable product and geographical mix.

The company declined to give a forecast for full-year profits or margins, but noted it still aims to generate savings from synergies of 600 mln eur this year as the transition continues.

It said it has cut 3,800 jobs in the year to date, out of a three-year target of 12,500.

Alcatel-Lucent predicted sales will increase in line with the carrier sector for the full year, with growth of around 5 pct for the full year on a constant dollar basis, including a ramp-up in activity in the second half.

It added that its order backlog at the end of the second quarter was higher than the first, thanks to increased momentum in orders following the merger.

alex.brittain@thomson.com

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