Alcatel-Lucent Plunges as Quarter’s Loss Is Double Estimates

May 6 (Bloomberg) -- Alcatel-Lucent SA, France’s largest telecommunications equipment maker, tumbled the most in three months after posting a net loss in the first quarter of more than double what analysts had estimated.
The shares plunged more than 11 percent in Paris trading after the company said parts shortages contributed to the widening of its net loss to 515 million euros ($660 million) from 402 million euros in the year-earlier period. Analysts had predicted a loss of 244.4 million euros, the average of 11 estimates compiled by Bloomberg.
“The numbers were extremely disappointing, although there was a positive tone from management,” Pierre Ferragu, an analyst at Sanford Bernstein in London, said by phone. “The market is reacting to the numbers, not the comments.”
Alcatel has lost money in all but two quarters since 2006, when Alcatel SA bought Lucent Technologies Inc. Its woes are mirrored at other European equipment vendors, which face price competition from companies including China’s Huawei Technologies Co. Last month Nokia Siemens Networks, the joint venture between Nokia Oyj and Siemens AG, increased planned job cuts in Finland, citing market conditions.
Alcatel’s shares had their biggest intraday drop since Feb. 11, the day it cut margin targets for this year. The shares fell 7.3 percent to 2.09 euros as of 9:22 a.m. in Paris, giving the company a market value of 4.86 billion euros.
“We were not able to fully satisfy customer demand for our products due to tightening components availability,” Chief Executive Officer Ben Verwaayen said in an e-mailed statement. “This resulted in a weak financial performance this quarter, which does not reflect the overall underlying momentum.”
Outlook
The company reiterated its 2010 outlook, and said it would benefit from “booming data traffic and the need to increase network efficiency.” In the latest quarter, Paris-based Alcatel said in the statement that sales fell 9.8 percent to 3.25 billion euros.
Verwaayen is banking on demand for upgraded mobile-phone networks to revive the company’s fortunes. Mobile-phone operators including AT&T Inc. and Verizon Communications Inc. are trying to build networks that can more easily handle demand from data-hungry devices such as Apple Inc.’s iPhone.
Supply problems are “an industry wide issue,” Verwaayen said on a conference call with reporters. Shortages are most acute for “components of a more general nature, for which we compete, to be honest, with the car industry and consumer electronics,” both of which are recovering from the recession, he said.
Verwaayen and Chief Financial Officer Paul Tufano declined to name suppliers whose parts are in short supply.
Cost Cuts
Revenue in North America was stable at about 1.11 billion euros, while the Asia-Pacific region slid 18.2 percent to 531 million euros. European sales fell 8.3 percent to 1.15 billion euros.
Verwaayen has targeted asset sales and cost cuts to return Alcatel to sustained profit. Last May, the company sold its 20.8 percent stake in aerospace equipment supplier Thales SA to Dassault Aviation SA for 1.57 billion euros. Alcatel-Lucent was created by the 2006 merger of Alcatel SA and Lucent Technologies Inc.
--Editors: Vidya Root, Simon Thiel