Thursday, July 31, 2014

Alcatel-Lucent Sees Strength in Europe & China, LTE Rollouts Expand

Alcatel-Lucent reported second quarter 2014 revenues of Euro 3,279 million, growing 0.7% year-on-year at constant exchange rates and comparable perimeter. Revenues for the Group excluding Managed Services, reflecting the termination or restructuring of loss-making contracts, grew 5.0% year-on-year. The company cited a very strong quarter in wireless, notably with LTE roll-outs in China and US.

Gross margin reached 32.6% of revenues in the quarter, improving by 140 basis points year-on-year, thanks to cost savings. There was a net loss (Group share) of Euro (298) million in Q2 2014, or Euro (0.11) per share.

"I am proud of the very significant improvement achieved in the second quarter which demonstrates the fourth consecutive quarter of consistent delivery under the Shift Plan. With the upcoming reimbursement of the secured loan and the subsequent recovery of the full ownership of its patents, Alcatel-Lucent recaptures the full control of its destiny and can close the first step of its transformation. The Group can now embark on the second chapter of its turnaround story: innovate, transform and grow while keeping intact the commitment of returning to positive free cash flow in 2015," stated Michel Combes, CEO of Alcatel-Lucent.

Some highlights:

  • North America was lower by 2.6% year-over-year, while sales in Europe grew 6% (excluding Managed services)  Asia Pacific posted a solid 25.2% year-over-year growth, driven by LTE network roll-outs in China. In the rest of World, MEA declined at a mid single digit, while CALA remained challenging.
  • Core Networking segment revenues were Euro 1,369 million in Q2 2014, down 10.0% compared to Q2 2013. IP Routing revenues were Euro 561 million in Q2 2014, down 7.0% against a strong comparison base in the year-ago quarter, with continuing growth in APAC and steady performance in EMEA. There were four new customer wins for the 7950 XRS IP Core router, including Chorus in New Zealand, for a total of 28 wins to date. Nuage Networks added 3 new wins in the quarter, totaling 8 customers. Th 7450 Ethernet Service Switch was selected by NTT DoCoMo to enhance the speed and capacity of its backhaul network.
  • The 1830 Photonic Service Switch (PSS) represented 43% of terrestrial optical product revenues in the quarter, up 12 percentage points year-on-year, and now has over 480 customers. 100G shipments represented 36% of total WDM line cards shipments in Q2 2014 compared to 27% in Q2 2013.
  • Alcatel-Lucent has shipped over 15,000 100G ports lifetime-to-date.
  • IP Platforms revenues decreased 19.2% year-on-year to Euro 324 million in Q2 2014.
  • Access segment revenues were Euro 1,907 million in Q2 2014, a 9.5% increase compared to Q2 2013.
  • Wireless Access revenues were Euro 1,299 million, an increase of 28.1% year-on-year.
  • Fixed Access revenues were Euro 521 million in Q2 2014, an increase of 2.9% from Q2 2013. There were two new VDSL2 vectoring customers in the quarter, bringing the total to 22.
  • Managed Services revenues were Euro 77 million, decreasing by 62.8%, reflecting the company's strategy to terminate or restructure loss-making contracts.