Despite Promise in LTE, Alcatel-Lucent Posts 7 Percent Q1 Loss

In a sign of how this down economy is forcing customers to cut back on “non-essential” network upgrades, the world’s largest maker of fixed-line networks today posted a 7 percent year-over-year decline in revenues for the first quarter, to $4.8 billion.

 

Officials at Paris-based Alcatel-Lucent say the figure also represents a 27 percent sequential drop, fueled by steep declines in carrier and enterprise segments, which offset growth in services and applications software revenues.

 

The company’s chief executive officer, Ben Verwaayen, said the quarter was about “putting together the new Alcatel-Lucent.”

 

“I am pleased with the customer response to our new direction and strategy,” he said. “Their confidence in our capabilities is strong, as illustrated by our recent wins in 3G and LTE as well as the encouraging increase in our order intake in both North America and Asia Pacific.”

 

About a month ago, Alcatel-Lucent announced that a mobile and fixed services company in China is deploying its 3G “Wideband Code Division Multiple Access,” or “W-CDMA” networks.

 

Specifically, Alcatel-Lucent said, Hong Kong’s China Unicom will deploy their networks throughout 14 provinces, bringing end users there media streaming, ring back tones, video sharing and high-speed Internet access.

 

According to Olivia Qiu, head of Alcatel-Lucent in East Asia and president of Alcatel-Lucent Shanghai Bell, the selection highlights the company’s leadership in the W-CDMA market.

 

Yet the company says it saw its wireless business impacted by a decline in 2G.

 

Revenues for the Wireless Networks division fell 18 percent from the year-ago quarter. CDMA revenues declined materially – driven largely by lower sales in North America, and were only partially offset by the roll-out of EV-DO in China.

 

GSM also declined significantly, the company said, as slower economic growth and in some cases currency devaluations impacted activity in the Asia-Pacific, Middle East and Africa. W-CDMA revenue increased sharply, however, driven by North America and the initial roll-outs in China.

 

“Finally, the company’s LTE solution is getting increased traction in the market place,” the company said. “In addition to its selection as one of the two vendors for Verizon, Alcatel-Lucent was shortlisted in several LTE trials this quarter.”

 

Going forward, the company said it expects the global telecommunications equipment and related services market to fall between 8 percent and 12 percent. As its CFO suggested several weeks ago, the company still anticipates an adjusted operating profit around break-even in 2009.

 

“While expected, given seasonality and tough market conditions, we are not pleased with the operating loss incurred in the first quarter,” Verwaayen said. “Our guidance for the year remains unchanged and we are taking appropriate actions.”