The Paris, France based company reported a loss of 336m euros ($459.7m), down from income of 302m euros (413.2m) on revenue that fell 3.7% to $5.9bn.
Alcatel finally got the scale it craved in the US at a time when the dollar was sliding in value, so at constant currencies, the company could claim that second-quarter revenue showed a 0.5% rise and a sequential rise of 13%.
CEO Patricia Russo said the strongest performance was in the wireline and services businesses while geographically the big growth came from Asia Pacific. She said it had reduced 1,900 positions, although acquisitions and managed services contracts added 400 jobs to the payroll. So far this year, Russo said the company had reduced headcount by 3,800 people, which was 30% of the three-year 12,500 target.
She said the company is sticking to the forecast of a growth rate for the year as a whole of mid-single digits at a constant Euro/USD exchange rate. This indicates a strong ramp-up in the second half 2007.
A weak area was the wireless business group where revenue declined by 11% to 1.23bn euros ($1.69bn), hit by low volumes, particularly in 2G GSM radio in Africa and eastern Europe. However, the 3G business recorded good growth, primarily driven by TD-SCDMA in China.
While market leader Ericsson has shunned WiMAX, Alcatel-Lucent said it has more than 70 trials deployed, so can expect to profit if the technology takes off. Belatedly, it is pushing into the services business and increased revenue by 7% to 750m euros ($1bn), with a 3.9% operating margin.
Our View
It is clear that competitors Ericsson, Nokia Siemens, and Huawei are making life as difficult as possible for Alcatel-Lucent. Job losses have so far been in soft areas such as R&D and IT but any real assault on costs will bring it into sharp conflict with France’s robust trade unions.
