It said 2007 revenue growth will be flat to slightly up, compared with its previous forecast of growth in the mid-single digits. This led to a 10.16% fall in its share price to $9.03 on the New York stock exchange.
Change in the revenue mix has also hit profitability and it said it expects to break even in the current third quarter, but is sticking to its belief that the fourth quarter will show a strong sequential increase.
Alcatel-Lucent said that after discussions with wireless customers in North America, it is now seeing a change in capital spending. As a result, it said it was not expecting the projected volume changes that would have mitigated ongoing pricing pressures. In other regions and businesses, in particular wireline, enterprise and Asia-Pacific, it said revenue performance remains strong.
Lucent’s position as a leading supplier of CDMA equipment in North America was one of its biggest attractions to Alcatel which was weak in the US market. However, squeezes on spending by its two biggest customers, Verizon Wireless and Sprint Nextel, have lowered its prospects for the year.
Its long-term position in North America is still encouraging and earlier this year it announced a three-year deal worth an expected $6bn to supply equipment for Verizon’s network expansion.
Alcatel-Lucent CEO Patricia Russo said the company is taking steps to accelerate the execution of its current restructuring program and to implement additional cost-reduction plans in markets that require further action.
