Writedown masks Alcatel-Lucent recovery

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Writedown masks Alcatel-Lucent recovery

Microscope contributor

Ben Verwaayen’s recovery strategy at Alcatel-Lucent has faltered after a €3.9bn impairment charge against the value of its assets knocked otherwise solid Q4 numbers for six.

The firm posted a quarterly net loss of €3.8bn for the three months to the end of December, reflecting a “drastic deterioration of the global economic outlook,” according to Verwaayen, who joined Alcatel-Lucentfrom BT last year and was charged with turning round the fortunes of the ailing comms giant.

In spite of posting its eighth straight quarterly loss, Alcatel-Lucent met its revenue guidance of €4.94bn, down 7.5% year-on-year, and also achieved its operating profitability targets, with Q4 adjusted operating profit reaching 6%.

“In the fourth quarter we did what we said we were going to do,” said Verwaayen. “I am encouraged by our operating performance, measured by our ability to achieve our top-line, operating margin and cash flow targets.”

“With an improving balance sheet, adequate funding, a new strategy in place and a clear roadmap to profitability, we are committed to executing on our plans to deliver better solutions and services to our customers,” he continued.

Verwaayen’s plan to cut Alcatel-Lucent’s costs by €750m on an annual run rate by the end of this year is progressing well, with a managerial reshuffle and a previously announced cut in contractor numbers well underway.

Alcatel-Lucent predicted an adjusted operating profit around break-even for 2009 amid the ongoing decline in its old core markets. The firm is currently implementing a plan to introduce more focused R&D and streamline its product portfolios, as well as ramping up its investment in WiMAX and LTE.


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