Monday, April 23, 2007

Alcatel-Lucent's Preliminary Results Indicate Soft Q1

Alcatel-Lucent issued preliminary results for Q1 2007, saying revenues for the quarter are estimated to be approximately EUR 3.9 billion, a year over year decline of around (8)% at a constant Euro/USD exchange rate or (12)% at current rate. Compared to a strong first quarter 2006, the lower volume is primarily attributable to wireless radio and core networks impacting the Wireless and Convergence businesses globally. The wireless decline is largely driven by lower volumes especially in 2G in some emerging markets.

Patricia Russo, CEO of Alcatel-Lucent said: "It has been four months since we completed the merger, and we are making good progress in terms of our integration. The technology choices have been finalized and the combined company's portfolio communicated to our customers. Concerning our cost saving plans, the net headcount reductions, before recently announced managed services contract wins, are approximately 1,900 during the quarter, 15% of the 3-year target of 12,500. Associated cost savings will be incorporated in our operating results going forward.

As previously stated, we anticipated that some of the factors which affected our business in the fourth quarter 2006 would continue in the early months of the year leading to some revenue decline. In particular, while parts of our businesses performed well, our first quarter results were impacted by lower volumes in traditional wireless and core networks at a time when considerable investments were made in the next generation of these technologies.

We continued to gain sales momentum during the quarter and increasingly recognized the benefits of our integration. At the end of the quarter, our book to bill stands at 1.3x, which leads us to remain confident in our ability to resume growth as the year progresses."


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