Alcatel-Lucent Sales Up, Stock Down

Pressure on margins cited for stock price decline of nearly 10%, while wireless business spurred 3Q results.

William Gardner

November 4, 2010

1 Min Read
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Alcatel-Lucent recorded a profit in its third quarter, as the company predicted continued rising sales and profits. Nonetheless, the company’s stock plunged by nearly 10% on the news, which was tempered by pressure on the firm’s margins.

The company, a combination of Alcatel of France and Lucent Technologies of the U.S., said its wireless division sales were “particularly strong” in North America due to data traffic growth.

The telecommunications infrastructure company also reported that it landed several global contracts with the Asian-Pacific region faring well, in addition to good growth in India and China. Also in the U.S., Alcatel-Lucent boasted that its GPON technology was used by EPB Fiber of Chattanooga to produce the first 1 Gigabit/second broadband residential-business network in the U.S.

Sales for the quarter were $5.79 billion, up 10.5% over the previous year’s third quarter.

“We anticipate a significant sequential increase in our top line in the fourth quarter,” said CEO Ben Verwaayen in a statement. “This, combined with our actions on costs, will lead to a strong leverage effect at the operating profit level. We maintain our full year outlook.” The company is predicting operating margin growth of between 1% and 5% for the next quarter.

Components shortages, Verwaayen said, were acting as a damper on growth, but he added that he expects them to clear up in future quarters.

Another strong area in networking -- Ethernet -- performed well in the quarter for Alcatel-Lucent, with a new 10 Gigabit Ethernet switch for enterprise core networks well received by customers, the company said. “Data networking was particularly strong,” according to the company, “with year-over-year growth in excess of 20%.”


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