Thursday, February 9, 2012

Alcatel-Lucent Sees Continued Improvement in Results

Alcatel-Lucent reported Q4 2011 financial results in line with its guidance, with significant sequential improvement to its cash and ongoing costs positions. Overall, the company posted revenues of Euro 4.256 billion for Q4 2011, up 9.5% sequentially and down 11.2% year-over-year at constant currency. There was a free cash-flow of €541 million for the quarter.

Commenting on the results, Ben Verwaayen, CEO, Alcatel-Lucent said: “I’m very pleased by the responsiveness of our company to adapt to a changing business environment. This has resulted in a significant improvement in free-cash-flow and an acceleration of cost-reduction actions. Overall, this concludes a second year of strong improvement in our results, and leads to the first positive full-year net results for Alcatel-Lucent since the merger. We have strengthened our financial flexibility with the Genesys divestment, while taking the strategic decision to realize the full value of our existing and future patent portfolio.�?

Mr Verwaayen added: “We were operating in a challenging environment in 2011. Looking ahead, we target, in 2012, additional savings of €200m in fixed costs and €300m in variable costs. We will continue to strengthen our portfolio, drawing upon an innovation pipeline of software assets and breakthroughs in wireless and fixed-line technologies such as lightRadio, 100G coherent technology, IP and vectoring – innovations that enable operators to quickly adapt to the continuing explosion of data and content.

Some highlights:



For the fourth quarter 2011, revenues for the Networks segment were €2.476 billion, a decrease of -16.1% compared to €2.952 billion in the year-ago quarter and an increase of 8.4% compared to €2.285 billion in the third quarter 2011.

Revenues for the IP division were €454 million, a 10.6% decrease from the year-ago quarter with Europe being the main driver behind the year-over-year weakness. However, this still represented the second highest quarter of revenue ever in the IP division, growing 20.7% sequentially, with double-digit growth across all regions, led by Europe which grew more than 30%. At the end of the quarter, the IP division saw a very healthy book-to-bill ratio. Full-year revenue for the IP division increased 9.9%, at constant currency, in 2011, with a 10%+ increase in service routing.

Revenues for the Optics division were €724 million, a decrease of 11.2% from the year-ago quarter, driven by a double-digit decrease in the terrestrial business, partially offset by mid-single-digit growth in our submarine business. Sequentially, revenues in our optics division grew 24.4% with double-digit growth across most of the portfolio, led by WDM, which saw very strong quarter-over quarter growth in all regions, led by the Americas and Europe. Full year optics revenues were down 2.1% year-over-year at constant currency, with the terrestrial business declining slightly, while the submarine business grew at a mid-single-digit rate driven by new builds and upgrades.

Revenues for the Wireless division were Euro 893 million, a decrease of 22.8% from the year-ago quarter. Wireless saw weakness across most parts of this business after several quarters of strong activity, with the exception of small/femto cells as well as GSM in APAC. Sequentially, growth was fairly strong in Europe and APAC, with both regions growing in the double digits, driven by GSM and small cells as well as W-CDMA in APAC. This growth was more than offset by weakness in the Americas as spending slowed down towards the end of the year. Full-year wireless revenues increased 4.6% at constant currency, with CDMA and LTE driving a majority of this growth.

Revenues in the Wireline division declined 14.1% from their year-ago level, to €419 million. Wireline, however, did see a strong sequential increase of 36.0%. The year-over-year decline in Wireline was driven by legacy businesses, partially offset by strong overall growth in APAC. The fiber access portfolio continued to show strength, growing in excess of 80%, mainly driven by GPON growth in the APAC and Americas regions. Full year wireline revenue fell 7.9% at constant currency as strong double-digit growth in broadband access equipment was not enough to offset double-digit declines in the legacy businesses.

Sales of next-generation Networks products decreased 11% from the year-ago quarter but increased 19% compared to the prior quarter at constant currency, reaching Euro 1,193million in the fourth quarter 2011. This accounts for 48% of Networks sales. Orders for our next-generation products increased in the double digits compared to the year-ago quarter in Q4’11.

S3 (Software, Services and Solutions)

For the fourth quarter 2011, revenues for the S3 segment were Euro 1,315 million, a decrease of 5.5% compared to Euro 1,391 million in the year-ago quarter and an increase of 19.5% compared to Euro 1,100 million in the third quarter 2011.


Revenues in the Enterprise business increased 0.3% compared to the year-ago quarter, at €325 million in the fourth quarter 2011and increased 1.9% compared to the third quarter 2011. At constant currency exchange rates, the Enterprise business was flat compared to both the year-ago quarter and the previous quarter. The segment posted an adjusted operating profit of €45 million or 13.8% of revenues compared to an adjusted operating profit of €37 million or a margin of 11.4% in the year ago quarter.