Telecommunications equipment manufacturers Alcatel and Lucent Technologies both reported increased revenue for the quarter that ended Sept. 30.
The companies coordinated their announcements Tuesday, ahead of their planned merger by year’s end.
Alcatel reported revenue of 3.34 billion euros (US$4.23 billion as of Sept. 30) for its third fiscal quarter, up 1.4 percent from 3.29 billion euros a year earlier. Net income for the quarter fell to 155 million euros from 266 million a year earlier. That translates to earnings per American Depository Share of US$0.14, just under the figure of $0.15 per share forecast by financial analysts polled by Thomson Financial.
Lucent’s revenue rose too, to $2.56 billion, up 5 percent from $2.43 billion a year earlier. Revenue within the United States rose by 17 percent, but revenue from elsewhere fell by 14 percent. Net income for the quarter, the last of Lucent’s fiscal year, remained stable at $371 million, giving earnings per share of $0.07, compared to the analysts’ consensus estimate of $0.04.
Alcatel reported growth in revenue and profit in its fixed-line networking division, as operators convert legacy networks to all-IP systems. Revenue in the sector rose 6 percent to 1.36 billion euros from 1.28 billion a year earlier, with operating income of 151 million euros, up 25 percent from 121 million a year earlier.
Performance in the mobile division was disappointing, however. Revenue there fell 9 percent to 994 million euros, from 1.09 billion a year earlier, while operating income fell 45 percent to 64 million euros, from 116 million a year earlier.
Customers are putting off major purchases until Alcatel completes its merger with Lucent, and its acquisition of Nortel’s Universal Mobile Telecommunications System radio technology, Alcatel Chief Executive Officer (CEO) Serge Tchuruk said during a conference call with journalists.
“It’s a wait-and-see situation,” he said.
This will be the last time the companies report their financial results separately. In April, they announced their intention to merge, and now expect to complete the deal by the end of the year. Shareholders of both companies have approved the deal, as have U.S. and European regulators.
The only remaining obstacle is the U.S. Treasury’s Committee on Foreign Investments in the U.S. (CFIUS), Tchuruk said during the conference call. The companies are working with it to win its approval for the deal, which could close as early as November, he said.
Announcing the deal, Alcatel and Lucent predicted the combined company would have annual revenue of 21 billion euros based on their financial results for 2005. They expect to make annual savings of 1.4 billion euros after the merger, in part by laying off about 10 percent of their 88,000 employees.
Observers have expressed incredulity at the savings target, but Alcatel is “comfortable” with the figure, and will aim to do even better, Tchuruk said.
Lucent CEO Patricia Russo will head the combined company, Alcatel Lucent, which will be based in Paris, where Alcatel has its headquarters.
-Peter Sayer, IDG News Service (Paris Bureau)
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