Friday, 4 November 2011

Alcatel Lucent Shares Fall on Weak Sales and Reduced Guidance

Economic uncertainty in Europe and decreasing demand for its older products made Alcatel Lucent to lower its 2011 full-year guidance as its shares slumped as much as 11% Friday.

Alcatel Lucent said that its fourth-quarter revenue would also be adversely affected.Sales of the company went down 6.8% to €3.8 billion in the third quarter of 2011 against the sales achieved in the same quarter a year earlier. However, a net profit of €194 million was reported for the quarter which was higher by €25 million last time. However, the profit was boosted in part by a one-off tax gain.

Alcatel Lucent said that it is now expecting an adjusted operating margin of about 4% in 2011 which is down 1% from its original target. Chief Executive, Ben Verwaayen said that the company was “not at a level we are satisfied with.” He warned of “weaker revenues than initially planned in the fourth quarter of 2011,”and announced that he would be cutting costs by a further €500 million in 2012.

Mr. Verwaayen said that under the present circumstances of Europe’s debt crisis and an unstable regulatory environment, it was impossible to forecast how the overall telecom equipment market would react in 2012. Alcatel shares fell 9.1% at 0921 GMT as market reacted adversely to the news.

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