Wednesday, February 1, 2006

Alcatel Posts Strong Q4 Sales and Profit

Alcatel saw Q4 sales rise by 7.6% to EUR 4.094 billion compared with EUR 3.806 billion (up 5.9% at constant EUR/Dollar exchange rate) in the same period last year. The gross margin was 34.8%. Operating profit amounted to EUR 541 million, a 13.2% operating margin.

Serge Tchuruk, Alcatel Chairman and CEO, said: "Alcatel has turned in a record fourth quarter, with revenues and profitability at significant levels and a strengthened net cash position of EUR 1.5 billion resulting from a strong free cash flow generation of EUR 0.9 billion. By mid year 2005, we saw a turnaround in our wireline business due to the success of our triple play strategy coupled with a breakthrough in our IP carrier data solutions. In addition, we registered continued expansion in our wireless business fuelled by our radio multi standard product strategy, which is well aligned with market trends, and a very efficient R&D program. In 2005 we grew our carrier business by over 10%, outpacing the market growth. In our private business, trends were mixed with a weakness in our satellite business while momentum grew both in enterprise and in the vertical markets.

Some highlights from the quarterly report:

  • Geographic breakdown: W. Europe 42%, North America 15%; Asia 14%; and RoW 29%.

  • Fixed communications: Q4 revenues increased by 12.3% based on strong sales in the access, optical, and IP carrier data segments. The access division recorded a historical high in DSL volume shipments at 6.7 million lines, bringing the cumulative total to 21.6 million lines for the full year, a 10% increase. The IP DSLAM product family continues to grow and represents a significant portion of lines shipped with over 60 customers to-date. Growth in access has been driven by the DSL replacement market as well as the increasing demand for video over the carrier network. The increase in the optics business continues to be driven by the new submarine projects as well as sustained demand in the terrestrial metro sector coming from the preparation for deployment of triple play services. The IP division turned in a very robust performance with the IP routing business gaining significant market share with over 100 customers and 5,000 systems shipped to-date and continued to more than offset the slight, anticipated decline in the MSWAN ATM based technology. The NGN/IMS business continued to record good momentum during the quarter, registering a win in Europe with the newly launched combined fixed/mobile application server for presence based services. The segment's growth was partially offset by the continuing decline in TDM voice switching.

  • Mobile communications: Q4 revenue increased by 15.2%. Strong growth in radio continued in hybrid 2G/3G with market share gains in the emerging markets of Africa, the Middle East, and Southeast Asia where subscriber demand for basic voice services remain strong. In the 3G sector, Alcatel's HSDPA technology has been well accepted by customers and trials are ongoing in developed countries. The NGN/IMS mobile core business recorded a good level of revenue during the quarter with its call server now performing well in live high traffic conditions in North America, where a record-setting 10 billion calls have been handled by the server. New customers were recorded during the quarter, in particular in Russia and Indonesia. Mobile applications continued to grow with a focus on converged pre and post paid payment solutions and User Centric Applications (video, music). To date, Alcatel solutions are enabling 20% of video mobile users on a worldwide basis.

  • Private communications: Q3 revenue decreased by 4.8%. Growth was robust in the enterprise and vertical market businesses. The Enterprise activity continued to grow its IP telephony with a particular focus on small businesses, and particularly in Europe.

See also