Alcatel-Lucent reported first-quarter revenues down 12.3 percent from a year earlier and 22.7 percent lower versus the fourth quarter, at EUR 3.206 billion. The network equipment maker suffered from a slowdown in spending among European carriers and declining CDMA sales in North America as operators move to LTE.
The Networks division recorded sales down 18.1 percent year-on-year to EUR 1.98 billion. Wireless sales fell 29.5 percent to EUR 788 million, optics was down 25.2 percent to EUR 489 million, and wireline fell 8.7 percent to EUR 282 million. The IP unit was the only growth area, with sales up 23.5 percent to EUR 431 million. At the Software & Services division, revenues were down 0.6 percent from a year ago to EUR 969 million, and the remaining enterprise activities contributed sales of EUR 178 million, down 8.7 percent.
The company posted an adjusted operating loss of EUR 221 million or 6.9 percent of sales, and the gross margin fell to 30.3 percent from 35.3 a year ago. Alcatel said the gross margin should improve in the rest of the year, on a better product mix. The net result for Q1 was a profit of EUR 398 million or 14 cents a share, thanks to a gain of EUR 659 million on the sale of its Genesys unit. After positive operating cash flow of EUR 168 million, the company finished March with net cash of EUR 784 million.
CEO Ben Verwaayen said the company had a slow start to the year, but was showing good progress on lowering costs and generating cash. Alcatel-Lucent maintained its full-year guidance, despite noting "uncertainties" in its main market Europe. Verwaayen said the group should have better visibility on annual profitability at the end of the second quarter.
