XT compensation won't affect our results: Alcatel-Lucent

Settlement was paid on no admission of liability basis, company says

Compensation payouts to Telecom by Alcatel-Lucent in the wake of the XT network issues earlier this year aren’t expected to have a material effect on Alcatel-Lucent’s financial results, according to Alcatel-Lucent.

This conclusion by the company is noted in its financial results for the year to December 31 2009, which were filed with the Companies Office on July 9. While the report doesn't name Telecom or the XT network, referring instead to "claims by a customer" and "components of a network supplied by Alcatel-Lucent New Zealand", it is unlikely to refer to anything other than XT.

A note at the end of the results, headed “Events occurring after the balance sheet date”, states: “Claims by a customer and counter-claims by Alcatel-Lucent New Zealand Ltd concerning components of a network supplied by Alcatel-Lucent New Zealand Ltd relating to events subsequent to year-end have been settled on a no admission of liability, full and final basis.

“The cost will be split between the Alcatel-Lucent group delivering units and Alcatel-Lucent New Zealand; however, the effect on the financial statements of Alcatel-Lucent NZ Ltd is not expected to be material.”

The note continues: “There have been no other events subsequent to balance date requiring adjustment to, or disclosure in, the financial statements.”

The 2009 results show a significant reduction in revenue and profits compared with 2008. Net profit for 2009 was $17,389,000, compared with $43,771,000 last year. Gross profit was $50,166,000, compared with $60,757,000 in 2008.

Sales revenue for 2009 was $333,892,000, compared with $423,522,000 in 2008.

The 2009 report notes that $16 million worth of dividends have been distributed to the company’s owners, Alcatel-Lucent Australia, which is itself a subsidiary of France’s Alcatel-Lucent SA.

No dividend was paid to the parent company in 2008.

In February, Alcatel-Lucent said fixing the issues relating to XT was its number one global priority. The company’s Asia-Pacific president, Rajeev Singh-Molares said ““We apologise to the customers of Telecom New Zealand. The full resources of our global business are available to address these problems — we will do whatever it takes.”

Alcatel-Lucent’s New Zealand head, Steve Lowe, departed in February, when the XT issues struck. He was repalced by Jyoti Mahurkar-Thombre.

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