Alcatel-Lucent expects poor Q4 results

Alcatel-Lucent warned that Q4 revenue and operating profit will be significantly lower than a year earlier, dragged down by uncertainty about the merger.

Alcatel-Lucent SA warned on Tuesday that its fourth-quarter revenue and operating profit will be significantly lower than a year earlier, dragged down by uncertainty among customers and employees about the merger of Alcatel SA and Lucent Technologies Inc., which completed on Nov. 30.

The company expects to report revenue of Euro 3.87 billion (US$4.79 billion) for the quarter to Dec. 31. That figure includes Alcatel's revenue for October and November, and Alcatel-Lucent's revenue for December.

To make comparison with past performance easier, when Alcatel-Lucent publishes fully audited results on Feb. 9 it will also give pro-forma figures for earlier periods as if the companies had already merged.

On that basis, the company expects fourth quarter revenue at Alcatel and Lucent together to total Euro 4.42 billion. That's a fall of 16 percent compared to the Euro 5.25 billion the combined entity would have reported in the fourth quarter of 2005. The company expects to report lower operating profit too, down from Euro 570 million to break-even on a comparable basis, it said.

For the full year, the company expects revenue for the combined entity to total Euro 18.3 billion, almost flat compared to the Euro 18.6 billion it would have reported a year earlier. Pro-forma operating profit for the year will slip to Euro 1.04 billion from Euro 1.41 billion a year earlier, on a comparable basis, the company said.

Revenue and operating profit were both affected by uncertainty among customers and workers as the companies integrated their product lines and organizations.

The prospects for the first full year as a combined company are much brighter, Alcatel-Lucent said. In 2007 it expects to grow at least as fast as the rest of the carrier market, between 4 percent and 6 percent.

The company disclosed plans to reduce costs by an additional Euro 200 million, beyond the cuts already announced, taking its target for total cost savings to Euro 600 million in 2007.

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