French telecoms equipment maker Alcatel-Lucent reported bigger-than-expected first quarter losses as slowing economic growth hurt demand.
“While expected, given seasonality and tough market conditions, we are not pleased with the operating loss incurred in the first quarter,” chief executive Ben Verwaayen said in the company's statement issued today.
“Our guidance for the year remains unchanged and we are taking appropriate actions.”
The adjusted operating loss was €254 million, compared with an adjusted operating profit of €36 million in the year-ago quarter and an average forecast of a €131 million loss from 11 analysts polled by Reuters Estimates.
Alcatel said that it continued to expect the global telecommunications equipment and related services market to decline between 8 per cent and 12 per cent at constant currencies in 2009.
Alcatel-Lucent is eliminating 1,000 management positions and reducing the number of contractors it uses by 5,000 to help reduce costs by €750 million as companies and consumers are expected to cut their spending on broadband and wireless technology.
Swedish telecom equipment maker Ericsson said last week that first-quarter core profit fell by almost half, hurt by a slumping global mobile phone market and cutbacks in investments by operators.
Alcatel said revenue fell 6.9 per cent to €3.6 billion in the first three months of the year. Analysts, on average, had expected sales of 3.57 billion. The net loss widened to €402 million from €181 million a year earlier, worse than the average in the Reuters poll of 282 million.
Alcatel is still expected to return to a net profit in the second half of next year and in full-year 2011, chief financial officer Paul Tufano said during a conference call with reporters.
Mr Tufano also reiterated that the company was well funded - helped by the imminent sale of its 20.8 per cent stake in Thales to Dassault Aviation for €1.6 billion - and did not need a capital increase.
Reuters