Alcatel reports Q1 profit, sees sales recovering

Alcatel made a net profit in what is traditionally a weak quarter for the telecommunications equipment maker. Sales are no longer declining, and the Paris-based company made an operating profit in all divisions, it reported Friday.

Net sales for the quarter totalled Euro 2.74 billion (AUD$4.56 billion as of March 31, the last day of the period being reported), down 3 percent on the corresponding quarter last year -- or up 2 percent at constant currency exchange rates, the company said. Figures for the previous year reflect the disposal of Alcatel's optronics and battery divisions.

Net income for the quarter rose to Euro 134 million ($222 million), up from a net loss of Euro 461 million a year earlier. Earnings per diluted share amounted to Euro 0.10, compared to a loss per share of Euro 0.35 a year earlier. Earnings per ADS (American depository share) came to $0.12; of the two analysts polled by Thomson First Call, one had predicted earnings per ADS of $0.09, the other a loss per ADS of $0.02.

"We believe the first quarter is a turning point after years of decline," Chairman and Chief Executive Officer Serge Tchuruk said in a conference call with journalists and analysts.

Year on year, sales declined by 2 percent in western Europe, which accounts for 43 percent of Alcatel's sales. However, in North America, which accounts for 15 percent of sales, business grew by 2 percent in euro value, or by 19 percent in dollar value, Tchuruk said. This put its growth rate ahead of the local market, he said.

The company sees significant year-on-year growth for the coming quarters, largely due to new technologies, he said, but added: "We see continuing contraction for legacy technology."

The company reports sales for three business lines. Two of them, fixed communications and mobile communications, deal with sales to carriers; the third, private communications, covers sales to businesses.

The private communications sector did well, Tchuruk said, with sales growing to Euro 865 million from Euro 817 million a year earlier. Alcatel's Genesys video conferencing subsidiary did well, and there was strong demand for IP (Internet Protocol) telephony equipment for the enterprise, he said.

Fixed communications sales for the quarter dropped 11.5 percent to Euro 1.16 billion. In the corresponding quarter last year, sales of fixed communication equipment, excluding the optronics division sold during the course of the year, totalled Euro 1.31 billion. Broadband access technologies such as DSL (digital subscriber line) are showing the strongest gains, Tchuruk said, adding that Alcatel had delivered equipment for 5.5 million DSL lines during the quarter. "We also see encouraging trends in IP-related data equipment," he said.

Sales of mobile communications equipment slipped to Euro 757 million from Euro 798 in the year-earlier quarter. Demand is strongest in Africa, China and Western Europe, the company said.

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