Monday, May 4, 2009

Alcatel-Lucent Posts Revenue of EUR 3.6 billion, down 7% YoY

Citing capital constraints especially in North America, Alcatel-Lucent report Q1 2009 revenues of Euro 3.598 billion, down 6.9% year-over-year. At constant currency exchange rates, revenue fell by 11.2% year-over-year and 28.3% sequentially. The was an operating loss of Euro 254 million or 7.1% of revenue. Adjusted gross margin came in at 31.5% of revenue for the quarter, down from 36.2% in the year ago quarter and 33.3% in the fourth quarter 2008.


"As we discussed before, 2009 will be a year of transition. We are reshaping the company and aggressively pursuing our product portfolio rationalization, co-sourcing, working capital management and SG&A reduction programs. While expected, given seasonality and tough market conditions, we are not pleased with the operating loss incurred in the first quarter. Our guidance for the year remains unchanged and we are taking appropriate actions," commented Ben Verwaayen, Alcatel-Lucent's CEO.


Some highlights of the quarterly report:


CARRIER SEGMENT


  • For the first quarter 2009, revenues for the Carrier segment were Euro 2.219 billion, a decrease of 14.0% compared to Euro 2.581 billion in the year-ago quarter and a decrease of 29.1% compared to Euro 3.129 billion in the fourth quarter 2008. At constant currency exchange rates, Carrier revenues decreased 18.3% year-over-year and 30.7% sequentially.


  • Revenues for the IP division were Euro 287 million, an increase of 4.7% from the year ago quarter. Alcatel-Lucent enjoyed another quarter of solid growth in IP/MPLS service routers, with particular strength in EMEA, partly offset by the continuing decline in ATM revenues.


  • Resilience in Optics: Revenues for the Optics division were Euro 657 million, a 2.1% decline from the year ago quarter, with contrasted market dynamics. On the one hand, revenues from long distance DWDM), optical cross connects and wireless transmission declined. On the other, metro aggregation grew at a double-digit rate and submarine optics grew strongly.


  • Wireless impacted by the decline in 2G: Revenues for the Wireless Networks division were Euro 911 million, a decline of 18.0% from the year ago quarter.


  • CDMA revenues declined materially which was driven largely by lower sales in North America, only partially offset by the roll-out of EV-DO in China.


  • GSM also declined significantly, as slower economic growth and in some cases currency devaluations impacted this activity in Asia-Pacific, the Middle East and Africa. W-CDMA revenue increased very strongly, driven by North America and initial roll-outs in China. Finally, the company's LTE solution is getting increased traction in the market place: in addition to its selection as one of the two vendors for Verizon, Alcatel-Lucent was shortlisted in several LTE trials this quarter.


  • Slowdown in access and switching: Revenues for the Wireline networks division were Euro 394 million, a decline of 28.4% from the year ago quarter. This decline was largely driven by legacy ADSL access and core switching, partially offset by the growth in VDSL and home networking (DSL CPE and GPON ONTs).


  • Alcatel-Lucent's IMS solution continued to gain traction and was selected by 4 new customers this quarter, including FT/Orange as part of its planned replacement of H323 technology by a SIP based platform for its VoIP services.


APPLICATIONS SOFTWARE SEGMENT


  • For the first quarter 2009, revenues for the Applications software segment were Euro 255 million, an increase of 13.3% compared to Euro 225 million in the year-ago quarter and a decrease of 22.5% compared to Euro 329 million in the fourth quarter 2008.


  • Carrier applications revenue grew at a double-digit rate, which was largely driven by rich communications solutions (IMS applications and messaging) in North America, the successful integration of the Motive portfolio and to a lesser extent payment and subscriber data management in Asia-Pacific, fuelled by wireless subscriber growth and the roll of 3G in China.


  • Genesys, the contact centre software activity, saw a decline in revenues this quarter due to the combination of strong results in the year-ago quarter, when a major contract was landed with a large European operator, and the slow-down in corporate investment.


ENTERPRISE SEGMENT


  • For the first quarter 2009, revenues for the Enterprise segment were Euro 245 million, a decrease of 17.5% compared to Euro 297 million in the year-ago quarter and a decrease of 23.0% compared to Euro 318 million in the fourth quarter 2008.


  • Revenues from Enterprise solutions declined in the low teens this quarter, as constraints in corporate investment impacted the voice telephony market, primarily in the SMB space, while the large enterprise market proved more resilient. Revenues were approximately stable in data networking and grew in security solutions and unified communications.


  • Revenues from Industrial components were the most impacted by the global market conditions and declined at a material rate this quarter.


  • From a geographic standpoint, Europe and Asia Pacific were the weakest, while North America saw a limited decline and Central and Latin America enjoyed slight growth.


SERVICES SEGMENT


  • For the first quarter 2009, revenues for the Services segment were Euro 797 million, an increase of 20.6% compared to Euro 661 million in the year-ago quarter and a decrease of 23.0% compared to Euro 1,035 million in the fourth quarter 2008.


  • Managed & Outsourcing solutions grew very strongly this quarter, driven by the many large contracts signed throughout the year 2008 and which had not come into effect in the first quarter of last year. Alcatel-Lucent signed three new managed services contracts this quarter, including BASE in Belgium.


Alcatel-Lucent noted that it is actively sharpening its portfolio around its "high leverage network" strategy, which aims at ensuring continuous and cost-effective scaling of bandwidth from the access to the transport layer, while "instrumenting" the network with built-in service and application awareness as well as traffic optimization capabilities. The company confirmed that it is engaged in active discussions with potential co-sourcing partners. The aim is to develop a joint go-to-market approach to leverage the IT/telecommunications convergence and help Alcatel-Lucent optimize its efficiency in areas such as IS/IT, finance, HR and R&D.


Alcatel-Lucent also reiterated its guidance for 2009. The company continues to expect the global telecommunications equipment and related services market to be down between 8% and 12% at constant currency in 2009. The company still anticipates an adjusted operating profit around break-even in 2009.


The full report along with a webcast is online.
http://www.alcatel-lucent.com

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