After seeing its revenue drop by a third last year, the Paris, France-based telecoms equipment supplier is bracing itself for a particularly grim first quarter when it expects sales to slump by 25% to 30%, though it expects losses to narrow as a result of cost-cutting.
For the fourth quarter to December 31, it posted a net loss of 1.1bn euros ($1.2bn), down from a loss of 1.49bn euros ($1.6bn) on revenue 33.4% lower at 4.5bn euros ($4.9bn). For the year, the loss was 4.7bn euros ($5.2bn), down from a loss of 4.96bn euros ($5.4bn) on revenue that fell 34.8% to 16.5bn euros ($18bn).
Alcatel’s bleak forecast for the year comes hot on the heels of this week’s prediction by LM Ericsson Telefon AB that the mobile systems market, which fell around 20% last year, will show a further 10% decline in 2003.
Like its competitors, all that Alcatel can boast about is the reduction in costs. After reducing the quarterly breakeven point by 2bn euros ($2.2bn) to 4.1bn euros ($4.5bn) by the end of 2002, it is now working to bring that down to 3bn euros ($3.3bn).
CEO Serge Tchuruk said that in 2002 Alcatel consolidated its leading position in broadband and built market share in mobile infrastructure. Broadband is one of the few growth markets and it helped the carrier networking division to increase revenue sequentially by 40.5% in the fourth quarter to 2.4bn euros ($2.6bn).
Alcatel Optronics is a disaster area and it is no surprise the company is thinking of selling it off. It recorded a loss of 418.8m euros ($456.5m) last year, up from a loss of 144.3m euros ($157.3m) on revenue that crashed from 470.4m euros ($512.7m) to 84.1m euros ($91.7m).
The big weakness of Alcatel is its dependence on Europe, which accounts for 43% of sales. By contrast, the US only accounts for 15% of total sales. Merger talks with Lucent Technologies Inc collapsed in May 2001, but the logic of such a merger in a market that keeps falling is irresistible today.
Source: Computerwire
