Alcatel Posts 'Solid' Q3 Results

LONDON --- French communications equipment maker Alcatel has halted the haemorrhaging in its fixed wireline business and is predicting steady growth at the fixed network division from next year as it announced Thursday (Oct 28th) third quarter results slightly ahead of expectations. For the three months ended September, sales were Euro 3.04 billion ($3.85 billion) compared with Euro 2.75 billion ($3.48 billion) for the corresponding period last year, up 11%. Sales were up 3 percent sequentially compared to the second quarter 2004.

Operating profit reached Euro 271 million ($343 million) compared with Euro 172 million ($218 million) in the third quarter of 2003.

Serge Tchuruk, Chairman and CEO described this as a 'solid performance in a very competitive environment'.

" With our third quarter return on sales at around 9 percent our book-to-bill ratio again exceeding 1 in the carrier space, we feel confident of meeting our future targets of double digit profitability, leveraging the growth in revenues and the continued expense containment illustrated by the healthy trend of Q3."

There was a strong rebound in mobile communications sales during the quarter, up 28 percent year-on-year to Euro 894 million, and Alcatel says there are "positive indications for the fourth quarter." Income in the division, however, was flat at Euro 103 million.The better performance was attributed in part to continuing focus on fast-growing countries with breakthroughs in India and Brazil and expansions in Russia, Africa, the Middle East and China.

The company says it expects major advances in the US wireless broadband and cellular market following the decision earlier this year to acquire Spatial Wireless.

Tchuruk says the company is beginning to see payback from its early investments in triple play technologies and "we are now glad to see strong momentum on worldwide markets. In this domain, our recent win with SBC for Project Lightspeed also validates our technology choices in next generation IP-DSLAM and IP service routing as well as our focus on integration of complex, end to end systems."

He added that while the wireline market has been declining or has remained flat in past quarters, "we have now reached a stage where profitability is back and where prospects in future years should reflect a deep transformation of carriers' service offering and of associated network configurations."

Tchuruk says the company is comfortable with its former guidance that sales for the full year will be up in the high single digit range.0