Alcatel income hit by slowdown

Telecom gear maker Alcatel-Lucent is still struggling to generate stable profits in the final stretch of Chief Executive Ben Verwaayen’s three-year turnaround plan. Revenue was up 2.4 per cent to 3.9 billion euros ($5.6 billion) in the quarter compared with a year earlier, and adjusted operating income was 108 million. Revenue was largely in line with analysts’ average expectation of 4 billion euros, but adjusted operating profit was considerably below consensus of 145 million, according to Thomson Reuters. The group, which competes with market leader Ericsson and China’s Huawei, also posted a net profit of 43 million euros this quarter, after a loss last year. Alcatel-Lucent has been riding a wave of investments by operators in the United States this year, boosting its results and leading some investors to bet that Verwaayen has gotten the company on the right track after a painful merger in 2006. AT&T and Verizon have been spending heavily to upgrade networks to be able to offer faster download speeds to smartphone customers, and Alcatel-Lucent has won big contracts with them. Some analysts wonder if Alcatel-Lucent is becoming overreliant on the US market, but CEO Ben Verwaayen downplayed such concerns, saying he expected Alcatel-Lucent’s sales in the United States to continue to be strong in the second half of the year. “We have a very broad product base in the United States and many customers there,” he said. Other signs are emerging that the market may be slowing as rivals such as Juniper and Cisco posted weak results and were punished by investors. “The outlook seems challenging when one looks at peers’ results published over last few days,” said Pohjola analyst Hannu Rauhala in Helsinki. From/ Gulf Today