Alcatel Shows Strong First-Quarter Growth

PARIS (05/04/2000) - Shares in Alcatel SA rose sharply in early trading today as the French company reported net income of 258 million euros (US$231 million) for the first quarter of 2000, as compared to a net loss of 18 million euros for the same period last year, on top of a 41.8 percent sales increase.

On a per share basis, net income reached 1.31 euros per diluted share, while operating profit for the quarter soared to 113 million euros, as compared to a loss of 154 million euros a year ago, Alcatel said in a statement.

In addition, Alcatel today also signalled its intention to become a "pure telecom player" focusing on high-speed data equipment, and announced plans for an IPO (initial public offering) of its cable business.

First-quarter net sales amounted to 6.12 billion euros, as compared to sales of 4.32 billion euros in the corresponding 1999 quarter. Sales of telecommunications equipment rose 47 percent overall, the company said in a statement today, prompting Alcatel to raise the full-year sales growth forecast for its telecom businesses to 30 percent from a figure "in the mid-teens" announced at the start of the year.

Around the world, Europe accounted for the bulk, or 57.3 percent, of Alcatel's net sales. The U.S. made up 19.5 percent of sales, followed by Asia with 6.9 percent and the rest of the world contributing 16.3 percent.

The company said increased use of mobile phones was driving demand for core network infrastructure in Europe, particularly in France and Germany. Earlier this week, Alcatel announced plans to form a joint venture with Japan's Fujitsu Ltd. for next-generation mobile systems. [See "Alcatel, Fujitsu Form JV for 3G Mobile Systems," May 2.]Alcatel is considering plans to sell off its cable unit, comprising some 18,000 employees in 18 countries, the company said in a statement, but plans to hold on to its fiber optics and submarine network equipment businesses, as well as the manufacture of components mainly used in telecommunications systems.

The deal, which would be opened to staff consultation in the next few weeks, will allow the company to concentrate on developing integrated voice/data solutions for carriers and enterprises, Alcatel said in the statement.

Sales growth in the energy and cable division, at 27 percent for first-quarter sales of 1.06 billion, was slower than in the telecom business. Operating income, however, rose from 1 million euros to 29 million euros, Alcatel said.

By 10.40 a.m. today, following the release of the report, Alcatel's shares on the Paris Bourse were up 5.37 percent, trading at 265 euros.

Alcatel, in Paris, can be reached at +33-1-4076-1010, or via the Web at

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