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ALCATEL CONTINUES STRONG FINANCIAL RECOVERY

Alcatel Alsthom NV demonstrated a strong financial recovery in its first-half 1997 results. Net profit totaled approximately $250m (FF 1.500m), compared to a net loss in the first half 1996 of $68m (FF 400m). Consolidated revenues were up 17%, totaling $14.7bn (FF 87bn) compared to $12.5bn (FF 74bn) in the same period last year. Most importantly for chief executive Serge Tchuruk’s strategy, the company’s telecom revenues were up 19%, the second-largest increase after systems and engineering, whose sales were up 37%. Alcatel used to be just an equipment manufacturer, but we have become a systems provider, said Tchuruk. In satellites, for example, we used to supply just the electronic and electrical components, but now we integrate them together with the total network. It is a phenomenon that we have seen in all sectors. Tchuruk says his objective of making Alcatel a FF 200bn-a-year company is realizable in the not-too distant future, since we are already at FF130-140bn [in yearly revenues]. Jean-Pierre Halbron, senior executive vice president, in charge of finance, said none of the improved first half results was due to the strong dollar. Of its telecom business, Tchuruk noted that two-thirds of the business still comes from the big incumbent operators, but that the company is focusing mightily on new operators. It also has a particular objective of growing its sales of telecom equipment and cables in the US – the target is $4m by 2000. Last year, they totaled $2.2m and are expected to hit $2.7m in 1997. The telecom division’s revenue per employee grew 24% in the first half, from $64,000 (FF380,000) to $80,000 (FF 470,000). Tchuruk also noted that the portfolio of telecom clients has expanded. Whereas Alcatel’s top ten clients accounted for 45% of sales in 1992, they are expected to account for only 30% this year. Telecom sales in certain emerging markets were also up spectacularly: 65% in Southeast Asia and 60% in South America. The mainstays of its telecom business today include SDH/SONET transmission equipment, DECT- based wireless access, intelligent network and ADSL for increasing the copper wire capacity. For the future, Tchuruk noted that the technological needs that will be created by the growth of internet favor Alcatel’s expertise. Great expectations Increased communications traffic, for example, will create the need for more transmission and switching capacity, while the need for faster access to information favors Alcatel’s ADSL technology. Finally, he noted, the demand for user-friendly access to the web is why Alcatel introduced its Webphone at the Telecom Interactive show in Geneva this month. The Webphone will be out in a few months, and it is Java based, which gives us great expectations for its future, he said. Jozef Cornu, president of Alcatel Telecoms, told Computergram that BT has signed on to market the Webphone. Alcatel’s GSM handset business has also seen enormous improvement since it renovated its product line last year. In cables, where Alcatel is over twice as large as its nearest competitor, Tchuruk says the company strategy is to take advantage of the growth in telecom cables and to restructure in other cable areas in order to maintain profitability. For the first half, revenues were up 20% in telecom cables, and stable in other sectors, despite intense competition in the energy cables market, Tchuruk said. In 1996, 43% of Alcatel’s cable sales went to the telecom industry, 34% to low-tension energy cables and 17% to energy and transport sectors. In the fiber optic sector, Alcatel says its market share has doubled, from 9% in 1995 to 18% this year, making it number two in the world. Tchuruk noted that the Mars vehicle Sojourner uses batteries from Alcatel’s Saft battery division. For a long time, we’ve been waiting for Saft to find its place in the market, and we may not be too far away from that day, Tchuruk said. Several states in the U.S. are beginning to require that 10% of the cars sold are electric, due to concerns about pollution. The same concerns are gathering force in Europe. And, our lithium batteries are now capable of doing 200km in the city before they must be replaced, he said.

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CBR Staff Writer

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