Shares of Alcatel-Lucent (ALU) plummeted almost 10 percent on Friday after the telecom equipment maker reported dismal third-quarter earnings.
The company, based in Paris and New Jersey, blamed the results on pared-back spending on the part of phone-company customers in Europe. Indeed, Alcatel-Lucent’s losses grew to euro182 million, or $269 million, topping the euro40 million loss from the same period a year earlier. The latest numbers were worse than analysts had expected.
Alcatel-Lucent’s revenue fell as well, down 9.3 percent to euro3.7 billion. Executives said fewer customers invested in aging technologies such as 2G for wireless and as the global recession impacted everyone’s network capex. France Telecom is one such example. The embattled service provider is one of Alcatel-Lucent’s biggest users but it has reduced outlay significantly as it tries to keep cash on hand, pay down debt and continue its controversial restructuring efforts.
Despite the challenges, Ben Verwaayen, Alcatel-Lucent’s CEO, said in a prepared statement he expects approximately 5 percent growth in 2010 and forecasts his company to net a profit in the second half of next year.
The combined Alcatel and Lucent have struggled since their 2006 union to justify the $11 billion merger. The deal was intended to create a global telecom equipment giant but Alcatel-Lucent has failed to realize the financial promise of the transaction. It’s also been hit, like its peers, by intense competition from low-priced rivals based in Asia.
