Alcatel Sees Q2 Revenue, Lucent Merger on Target

Alcatel expects to see a 7.5 percent year-on-year increase in revenue for the second quarter, in line with earlier projections, the company announced late Monday. Its merger with U.S. counterpart Lucent Technologies is also on track, with completion expected by year’s end, it said.

The French telecommunications equipment manufacturer expects revenue for the second quarter to total about 3.38 billion euros (US$4.24 billion as of June 30, the last day of the period concerned), based on preliminary, unaudited figures. That’s an increase of 7.5 percent compared to the same quarter last year. The company expects its operating margin for the quarter to be about 8 percent. The company will report final results on July 27.

Alcatel’s merger partner, Lucent, is faring less well; it expects revenue and profit to fall in the second quarter (its fiscal third quarter), it said Monday. When it announces final results for the quarter on July 26, it expects to report revenue of $2.04 billion, compared to $2.34 billion a year earlier.

The companies expect to complete their merger transaction by year’s end, well within the range of six to 12 months they indicated when they announced the deal on April 2.

They remain confident that within three years, they will reach their target of 1.4 billion euros in annual cost savings, they said. More than half those savings will come from job cuts; the companies expect to cut 9,000 from their combined payroll of 88,000. Lucent had revenue of $9.44 billion in its last fiscal year, and Alcatel 13.1 billion euros.

The two companies have defined the final structure of the still-unnamed merged entity, and will implement the new structure as soon as the deal closes, they said.

The merged entity will be organized into three groups: enterprise, service and carrier. Hubert de Pesquidoux, currently president of Alcatel’s North American activities, will lead the enterprise group, and John Meyer from Lucent’s global sales and services organization will lead the service group.

Etienne Fouques, president of Alcatel’s “Europe and South” division and previously head of carrier networking, will head the new carrier business group. It will comprise three divisions: wireless, led by Lucent’s president of mobility research and development, Mary Chan; wireline, led by Alcatel’s president of fixed communications activities, Michel Rahier; and convergence, led by Marc Rouanne, Alcatel’s president of mobile communications activities.

Alcatel’s president and chief operating officer, Mike Quigley, will become the combined company’s president, science technology and strategy.

The companies had already announced that Serge Tchuruk, currently chairman and CEO of Alcatel, will chair the merged entity and that Patricia Russo, chairwoman and CEO of Lucent, will become CEO of the combined company.

Customer support in the new company will be decentralized into four geographic regions. Europe and South will cover France, Italy, Spain, other southern European countries, Africa, the Middle East, India and Latin America, led by Olivier Picard, currently Alcatel’s president of France, Africa, Middle East and South Asia. “Europe and North” will include the United Kingdom, nordic countries, Belgium, the Netherlands, Luxembourg, Germany, Russia and Eastern Europe, under the direction of Vince Molinaro, Lucent’s president for North America sales and delivery. The North America region, headed by the current president of Lucent’s network solutions group, Cindy Christy, will cover the United States, Canada and the Caribbean, while China, northeast Asia, southeast Asia and Australia will fall under the control of Frederic Rose, already responsible for that region at Alcatel.

-Peter Sayer, IDG News Service (Paris Bureau)

Related Link:

• Lucent Warns of Lower Q3 Revenue, Profit

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