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Alcatel-Lucent returns to profitability

Alex Scroxton

Alcatel-Lucent has posted its first net profit since its troubled 2006 birth and says it will break even this year in terms of adjusted operating income.

The Franco-American comms giant posted Q2 net profit of €14m, having booked €255m after selling its stake in Thales to Dassault during the quarter. Second quarter revenue was down 4.8% year-on-year to €3.09bn.

However, there is still work to be done, as Alcatel-Lucent is still burning through cash like it was going out of style, haemorrhaging over €280m during the three months to the end of June.

This figure is higher than predicted and has raised eyebrows among Alcatel-Lucent watchers. It is a situation that will need to be addressed urgently.

"Overall I am pleased," said CEO Ben Verwaayen in a statement. "Operationally we are seeing positive trends in our top-line, gross margin and operating expenses."

"Looking forward, market conditions remain difficult and operators continue to be selective about their investments. We reiterate our view that our addressable market should be down between 8% and 12% at constant currency in 2009," he continued.

If ex-BT man Verwaayen can hold the ship steady over the next six to twelve months he will have pulled off a remarkable turnaround.

Just a year ago speculation was rife that the two year-old merger between Alcatel and Lucent was doomed thanks to a major culture clash between its French and American managers.

The boardroom rumpus led to the swift exit of CEO Pat Russo - who arguably helped her departure along by telling a roomful of French shareholders that she didn't speak the language - and the installation of the Dutch Verwaayen.

Happily, this morning it was a different story as the figures beat analyst predictions by a country mile, sending shares in the firm soaring.


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